SEBI approves new derivative products

Mumbai: The Securities and Exchange Board of India (SEBI) has approved several new derivative products to provide investors a wide range of risk mitigation products and create more activity in the onshore market.

The products include mini-contracts on equity indices, options with longer life, volatility index and F&O contracts, futures options, bond indices and F&O contracts, foreign exchange F&O and exchange-traded products.

Currently, the minimum value of equity indices or any futures contract has to be Rs2 lakh. It is understood that mini-contracts would mean less than Rs2 lakh. That could, however, require some regulatory permission, because the Rs2 lakh figure was approved by the parliamentary standing committee on finance.

"These products are also expected to bring transactions based on private-synthetic products to an exchange-traded transparent mechanism with appropriate regulatory supervision," the market regulator said in a statement.

Meanwhile, SEBI said, its committee on derivatives is expected to finalise its recommendations on over-the-exchange derivate products.

The markets trade normally between $15-20 billion of derivative products on a daily basis. The committee on derivatives, set up on March 30 this year, has suggested introduction of a number of derivative products and the SEBI board has accepted the interim recommendation.

These are interim recommendations and it requires a lot of regulatory work before these products can come into the market, analysts point out.