The Securities and Exchange Board of India has decided to permit stock exchanges to introduce derivative contracts (futures and options) on foreign stock indices in the equity derivatives segment. In a notification to chief executive officers of the equity derivatives segment of the National Stock Exchange and the Bombay Stock Exchange, the capital market regulator said a stock exchange might introduce derivatives on a foreign stock index if derivatives on that index were available on any of the stock exchanges listed by SEBI. In terms of trading volumes (number of contracts), derivatives on that index figure among the top 15 index derivatives globally or that index has a market capitalisation of at least $100 billion.
After introduction of derivatives on a particular stock index, if that stock index fails to meet any of the eligibility criteria for three months consecutively, no fresh contract will be introduced on that index. However, the existing unexpired contracts would be traded till expiry and new strikes may be introduced on those contracts.
The absolute numerical value of the underlying foreign stock index will be denominated in Indian rupees. The derivatives contracts on that foreign stock index will be denominated traded and settled in Indian rupees.
Some of the stock exchanges listed by SEBI are: BM&FBOVESPA, Chicago Board Options Exchange, CME Group, ICE Futures U.S., International Securities Exchange. MexDer, Montréal Exchange, NASDAQ OMX PHLX, Australian Securities Exchange, Bursa Malaysia, Hong Kong Exchanges, Korea Exchange, Osaka Securities Exchange and Singapore Exchange.