Index futures commenced on BSE on June 9, 2000 and the one-month contract expired on Thursday. According to market sources, volumes are slow to pick up with trading in derivatives restricted to members and their select high net worth clients. The institutions have been conspicuous by their absence.

Sources said most trading members were yet to source their back office software at `reasonable' cost, making it difficult to commence operations in the derivatives segment.

Institutions, including FIIs, are yet to join trading as they have yet to put their internal risk management systems in place. FIIs, in particular, are not comfortable with depositing the initial margins in rupees and are seeking the clearance of the regulators to pay in dollars so that they can iron out the currency fluctuation risk during the tenure of the deposit lying with the exchange.

Sources pointed out that participants were, by and large, able to predict the index movement in the near contract and hence ended the first settlement with a profit position.

In fact, the summary of Thursday's trading shows that 205 contracts valued at Rs 5.18 crore were traded with a maximum 114 contracts done in the June series, 87 in the July series and 4 in the August series.

The first trade of 5 contracts for June series was done on June 9 between Kaji & Maulik Securities Private Ltd and Emkay Share & Stock Brokers Ltd at the rate of 4755. The initial margins which was pegged at 10 per cent has subsequently been changed to 8.5 per cent, according to Manoj Vaish, CEO of the derivatives segment of BSE.

The final settlement price of 4801.04 for the June series was arrived at by taking 120 readings of the Sensex in the last half hour of trading, knocking off the top 20 and the bottom 20 readings and averaging out the balance values.

The September series starts tomorrow to maintain continuity of three contracts running in tandem at all times.