``If things go as planned, trading in derivatives (a form of forward trading in derivatives like stock index and currency) would take off by June end,'' SEBI chairman D R Mehta said. Though the Gupta committee had recommended that only institutional investors should be initially allowed to trade in derivatives, he said it was his personal opinion that high net worth individuals should also be allowed.

Addressing a seminar on `Managing Derivatives' organised by the National Stock Exchange and British Invisibles (an association of financial services firms in the UK), Mehta said that had the board met on its scheduled date of April 25, the committee report would have been cleared on that dayitself. However, the meeting has been rescheduled due to the unavailability of two board members and has hence been postponed to a later date. ``We do not expect any substantial changes in the report only a few changes here and there,'' Mehta said.

Mehta said that it was his view that derivatives should not be restricted to institutions alone as a number of experts had pointed out that this may not be feasible. ``We must also see that very small investors do not also come into this segment which can be risky. Hence institutions and high networth individuals should only be allowed to trade in these instruments,'' he said. Mehta added that the cash market had strengthened substantially over the past few years and the latest efforts of the regulator to give a boost to dematerialisation had also been successful. He said that the SEBI committee on depositories would expand the list of companies of compulsory trading in demat shares by institutions in its meeting on Friday.

NSE expects to kick off derivativestrading in about two-three months from the date of the go-ahead from SEBI. Dr R H Patil, managing director of NSE attributed the delay in implementing derivatives to empanneling their members, setting up of a separate settlement guarantee fund and getting other approvals.

According to Nicholas Durlacher, chairman of the Securities & Futures Authority (SFA), there exists in India a sound working cash market a pre-requisite for introduction of derivatives. He said that it is imperative to test the participants before allowing them to trade in derivatives.