SEBI to introduce 7 derivative instruments

SEBI to introduce 7 derivative instruments

Market regulator Securities and Exchange Board of India (SEBI) decided to introduce seven new derivative instruments like mini-contracts and long-tenure options for giving more choice to investors.

``It is expected that these new derivative products will provide investors with a larger range of risk mitigation products and create more activity in Indian onshore markets,`` the regulator said in a statement after its board meeting in Chennai on Wednesday.

The new products include mini-contracts on equity indices; options with longer life/tenure; volatility index and futures & options (F&O) contracts and options on futures.

Other products which would be introduced are bond indices and F&O contracts; Exchange-traded currency (foreign exchange) F&O and exchange-traded products to cater to different investment strategies.

The products are based on interim recommendations of the M Rammohan Rao Committee.

The regulator also said these products are expected to bring transparency in trading of derivative instruments with appropriate regulatory supervision.

SEBI said the products will be launched under a suitable regulatory framework to be worked out in consultation with other regulators and stakeholders.

The timeframe for starting these products will depend on the product design, risk mitigation features and conformity to regulatory requirements.

As regards the over the counter (OTC) derivatives products, the SEBI Board would take a decision after receiving the recommendations of the Rao Committee.