"Sebi is fully committed to derivatives trading in India," said Mehta. "Unless derivatives are declared as securities we cannot be held responsible for the delay," he explained in the light of the delay on account of the need to amend the SCR Act. He categorically stated that "derivatives are instruments which the Indian markets need".

Mehta also said that the money brought in by foreign institutional investors (FIIs) cannot be considered as hot money. In order to substantiate his statement, Mehta presented the figures on FII transactions during the period between July 1-27, when FIIs were net buyers tothe tune of $15.6 million.

NSE chairman SH Khan, while speaking at the launch of the CNX indices, also brought to light the presence of a world-wide business of over $2 trillion which is based on indices. He expressed confidence in the consultancy provided by Standard & Poor's (S&P's) in launching the CNX indices which could form the benchmark for derivatives trading in India.

Speaking on the objectives of the new entity, IISL, RA Shakotko, the representative of S&P, stated that their mission would continue to remain the same: to develop, construct and maintain indices on Indian equities that would serve as useful market performance benchmarks and form the underlying indices for derivatives trading.

The services offered by IISL in terms of equity indices would constitute of index futures and options and index funds -- S&P CNX Nifty, S&P CNX Defty and CNX Nifty Junior.

The S&P CNX Nifty index would continue to have the same constitution as that of the currently traded Nifty Index, where all stocks havea market capitalisation greater than Rs 5 billion or $118 million and have been traded on 85 per cent of the trading days at an impact cost of less than 1.50 per cent.

"The low impact cost of the S&P CNX Nifty makes it an optimal index for derivatives trading," commented Shakotko who also explained that S&P would review the indices on a quarterly basis.

Crisil is reported to have contributed about Rs 13 lakh to Rs 14 lakh to the new project.

PJ Nayak, the acting chairman of UTI, took over the show by presenting an extensive study made by the fund managers on the impact cost involved while anchoring the master index fund on the two leading indices of the country -- the BSE Sensex and Nifty Index.

In the absence of enough liquidity and representation, Nayak maintained that the impact cost involved in anchoring the fund on the platform of the Sensex was higher by 30-40 per cent compared with the cost involved in the case of Nifty. However, a change in the Sensex's composition in 1997 saw a drastic fallin the impact cost coupled with the advantage of pegging the scheme on a liquid index.