Panel to submit final report on futures and options in 15 days
PRESS TRUST OF INDIA
NEW DELHI, January 22: The derivatives committee is likely to submit its final report on introduction of futures and options in the country to the Securities and Exchange Board of India (SEBI) within a fortnight."The final report for starting futures and options trading on stock exchanges is ready and the committee will submit it along with stock exchange regulations in the next two weeks," its chairman L C Gupta told PTI. The committee has already framed some regulations but is yet to lay down the administrative principles for starting futures and options trading on the exchanges, he said. To have been submitted by last year-end, the report was delayed as SEBI chairman, D R Mehta, had asked the committee to frame stock exchange level regulations to make uniform derivatives trading norms for all the bourses across the country. Gupta said the committee is also looking at various possibilities for the size of contracts in which an investor can enter into. The contract size is very important as the value ofindex futures contract for different stock indices will be different, he said. The committee has recommended starting derivatives trading with index futures but has not mentioned any specific index for entering into futures contract. Gupta said since derivatives are also good instruments for arbitration, the committee will also consider what kind of investors can enter into arbitration. Stock exchanges presently do not allow investors other than its members to enter into arbitration. He said since the functioning of various stock exchanges are different, the committee will lay down principles for derivatives trading so that they do not contradict each other. The 24-member committee will also decide on the margins and other charges relating to futures and options trading charged from the members of the exchanges, Gupta said. It has also recommended futures and options trading on stock exchanges through index futures in consultation with various market intermediaries like mutual funds, stock brokers and
merchant bankers. Index trading could be started on any exchange provided the exchange sets up a separate division for futures trading, the committee had recommended. The committee has also suggested starting financial derivatives, in addition to equity derivatives. However, it said only equity derivatives should be started in the beginning. It recommended setting up of a separate board for each exchange to administer derivatives trading while barring the head of the board from trading in derivatives to avoid clash of interest. The report has also called for strengthening of cash market alongwith a shift to rolling settlement from weekly settlement for smooth functioning of derivatives trading. The derivatives committee was set up in November 1996 and the committee had submitted its first draft report in September last year.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
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