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Derivative volumes on global indices S&P-500 and the Dow Jones Industrial Average (DJIA) made a slow start in opening day's trade on the NSE.
S&P-500 index futures clocked a volume of 1,238 contracts worth Rs 37 crore while S&P-500 index options reported a volume of 1,629 contracts (1,367 call option contracts and 262 put option contracts ) worth Rs 50 crore ( Rs 42 crore for call options and Rs 8 crore for put options).
Futures on Dow Jones saw a trading volume of 1,253 contracts for September expiry worth Rs 36 crore, while the October expiry saw only two contracts being traded at Rs 5.7 lakh.
“For new products, it takes time to build volumes and more so when sentiment is bad,” said Mr Siddarth Bhamre Head –Derivatives, Angel Broking. “There will surely be steady growth in derivatives on S&P-500 and Dow Jones traded on the NSE in the coming months.”
S&P 500 futures for September expiry (on the NSE) on Monday closed at 1,184.5 whereas the parent futures contract at the same time was trading at 1,187.
DJIA futures for September expiry (on the NSE) closed at 11,355 on Monday while its parent futures contract at the same time was trading at 11,365.
In order to boost volumes, the NSE said that no transaction charges would be levied on these global index derivatives until February 29, 2012.
Futures and options on the S&P 500 index denominated in Indian rupee have been introduced while only futures have been introduced on the Dow Jones Industrial Average.
MARKET MAKING
The NSE has also announced that liquidity enhancers (also called market makers) would be given incentives at three levels. The first would be for the value of liquidity in terms of orders; the second for the actual value of trades done every day and finally for maintaining an exchange-specified threshold of open interest during a month.
The liquidity enhancement scheme would come into effect from September 15 for a period of six months. Incentives at all three levels will be paid proportionately to the top five participants from an incentive pool of Rs 18 lakh per month during the time the scheme is in operation.
OPEN INTEREST
Open Interest in S&P 500 index futures was 1,64,250 on the first day while Dow Futures had an open interest of 9,600 contracts.
Open interest refers to the number of outstanding contracts for a particular maturity. For instance if one buys 2 contracts and sells both in intraday trade volume is four (2+2) but open interest is zero (plus 2 and minus 2). However if one buys two contracts and sells only one in intraday trade volume is three (2+1) whereas open interest is one (plus 2 and minus 1).
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