With reference to “Liquidity on steroids” (Business Line, July 26), we have strong reservations with some of the points raised in the editorial.

Till July 31, 2012, there is a capped limit on the traded volumes that are incentivised, which is as follows — Index futures: Rs 830 crore volumes per day; Index options: Rs 5,100 crore volumes per day. On July 25, for instance, the trading volume at the BSE was Rs 1,07,395 crore in options, 21 times more than the limit capped for the incentives payment.

Clearly, since people are trading more than 21 times of the capped incentive limit for volumes, the claim made in the article of traders and investor trading only for incentives is unfounded. Also, attributing surge in volumes over the last few days to incentives only is unfair.

Till date, several thousand investors have already traded in the BSE’s derivatives segment at least once. Other exchanges in India have similar number of retail participants in their derivatives markets.

Till date, more than 356 brokers have traded in the BSE’s derivatives segment. Some FII brokers are already members of BSE’s derivatives segment.

BSE transaction charges are 74-99.5 per cent lower in futures and by 99.5 per cent in options, as compared to competition. Since similar liquidity is available at lower costs, traders might be trading more on the BSE.

the BSE has put in place a new technology framework for trading, clearing and settlement in derivatives to handle more orders. It also conducts real-time risk management, efficient margining, collateral management, settlement of funds and securities in derivatives.

Rohit Khatua

Head, Marketing Communications & Office of the CEO

BSE, Mumbai

(This article was published on July 26, 2012)
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