Speaking at a seminar on derivatives, Gehrotra said he expected the amendment to the definition of `security' to include derivative instruments to be passed by Parliament in the current session. On the timing of the launch of derivatives trading, he said at the earliest, it would be at the end of January 1999.

He made it clear in his presentation that derivatives would be restricted to stock index futures only in the beginning. Introduction of other products would depend on market demand, he added.

In his address, the chairman of the Unit Trust of India, P S Subramanyam, said derivatives would open up an exciting trading opportunity for institutions and individuals and help increase liquidity in the cash market without causing toomuch volatility.

``Derivatives are here to stay. They are like fire, dangerous and useful, depending on how it is used,'' he remarked. Kalpana Morparia, senior general manager of ICICI, spoke on identification of risks and a corporate policy for risk management. She added that derivatives could play a useful role as a hedging instrument as well as a tool for resource mobilisation.

Illustrating her point, Morparia said ICICI was the first to launch the Sensex Bond in April 1997 which had a minimum yield of 13.5 per cent coupled with benefits of appreciation based on the level of the Sensex after 15 years. ``The design was brilliant but probably ahead of the times because it did not get good response from the investing public,'' she added.

R Ravimohan, managing director of Crisil, spoke on various derivatives instruments and their utility in risk management.