The Hindu Business Line : TCS in F&O segment: The size does matter

TCS has found its way to the F&O segment by virtue of its sheer size. According to the National Stock Exchange (NSE), for unlisted companies coming out with an initial public offering, if the net public offer is Rs 500 crore or more, then the exchange may consider introducing stock options and stock futures at the time of its listing in the cash market. As TCS rose over Rs 5,000 crore through IPO, NSE considered it as a fit case to trade in the F&O segment.

The NSE has set broad eligibility criteria for the selection of securities to trade on the futures & options segment:

* * The security should be amongst the top 500 securities in terms of average daily market capitalisation and average daily traded value during the previous six months.

* The security's median quarter sigma order size over the last six months should be at least Rs 5 lakh. Quarter Sigma order size can be defined as the order size (value) required to cause a change in the stock price equal to one-quarter of a standard deviation. The quarter sigma order size is calculated by taking four order book snapshots in a day for a security for the last six months.

* The market-wide position limit should be at least Rs 50 crore.

After a promising start, trading levels in the TCS contract eased. The September contracts on TCS closed the week at Rs 970.55, a premium of 0.8 per cent to the spot close of Rs 962.65. Options on TCS were not actively traded. The market lot is 250 for every contract.

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