Introduction of Derivative Contracts on Foreign Stock Indices

SEBI has issued a circular which permit Stock Exchanges to introduce derivative contracts (Futures and Options) on foreign stock indices in the equity derivatives segment. This circular comes into force from today. It is available on SEBI website Click Here: at http://www.sebi.gov.in/circulars/2011/cirdnpd022011.pdf

Eligibility Criteria: The minimum market capitalization mandated is USD 100 billion and the stock exchange may introduce derivatives on a twenty four foreign stock index if the derivatives on that Index is available. Index should be is “broad based”, that is, the Index consists of a minimum of 10 constituent stocks and no single constituent stock has more than 25% of the weight, computed in terms of free float market capitalization, in the Index.

Trading in derivatives on Foreign Stock Indices shall be restricted to residents in India.