The Hindu Business Line : SEBI encouraging markets to move onshore

Chennai, Nov. 14 The Securities and Exchange Board of India on Wednesday “signalled our intention” to encourage markets to move onshore, by suggesting seven new derivative products that the stock exchanges may consider introducing.

The decision to this effect was taken at SEBI’s board meeting here on Wednesday. Speaking to journalists at the end of the meeting, SEBI’s Chairman, Mr M. Damodaran, said that the suggested derivative products were based on the interim recommendations of the SEBI Committee on Derivatives, headed by Prof. M. Rammohan Rao.

The seven products are: mini-contracts on equity indices, options with longer life, volatility index and F&O contracts, options on futures, bond indices and F&O contracts, exchange-traded currency (foreign exchange) futures and options and exchange-traded products to cater to different investment strategies.

SEBI had invited comments on these products. Pointing out that the stock exchanges, and not SEBI, would introduce the products, Mr Damodaran said that at least one of the products would hit the market in a few months.

“It is our intention to see that India’s market becomes largely an onshore market and to see that parts of the market do not indefinitely continue to be offshore,” he said. The idea is to have more products in the Indian markets, so that the markets would grow and “growth will protect investors”.

Expectations

“It is expected that these new derivative products will provide investors with a larger range of risk mitigation products and create more activity in the Indian onshore markets. These products are also expected to bring transactions based on private-synthetic products to an exchange-traded transparent mechanism with appropriate regulatory supervision,” says a press release issued by SEBI.

Mr Damodaran said that the suggested products would be open for wider consultations. The process would help determine which products are needed by the market and give Exchanges time to introduce them.