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Virendra Verma

Mumbai , March 23

NATIONAL Stock Exchange (NSE) has emerged as global leader in stock futures trading.

Based on number of contracts, NSE stock futures trading has maintained top slot worldwide for the past few months. According to World Federation of Exchanges, NSE led in stock futures trading with 41,67,787 contracts traded for February. Johannesburg Stock Exchange held second position with 8,41,985 contracts and Euronext Liffe was third with 4,22,475 contracts.

In the previous few months also NSE had remained at the top. In fact, the number of contracts traded in the previous months was much higher than in February. The highest number of contracts traded was in December 2004 when 52.38 lakh contracts were traded. In January, there was a marginal decline to 45.51 lakh contracts.

In the index futures category, NSE was at number five while in index options and stock options it was at number 13.

Brokers attributed the success of stock futures trading in India to the familiarity of this instrument to most market players. "Since the basis of this instrument (stock futures) is similar to badla system (carry forward system), market players have been comfortable trading it," said a broker.

According to him, the success of this instrument is despite the risk associated with it. Stock futures is considered a risky financial instrument globally.

In terms of type of market participants in the derivatives segment, retail investors continued to be major players with a share of 58.68 per cent in February.

This was followed by proprietary trading which accounted for 35.76 per cent during the month and institutional investors accounting for the remaining 5.56 per cent.

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