New Delhi: In a big leap for capital markets in India, regulator SEBI is looking into the possibility of allowing strategy-based derivative trading--a move that may help bring in various new products in this segment.
Currently, the derivative contracts, including futures and options, have as their underlying asset mostly stocks, bonds, currency, indices, or interest rate.
The new proposal, which is in early stage of consideration, involves allowing derivative contracts based on an investment strategy linked to different asset classes and different macro-economic and other factors, sources said.
Globally, there are various kinds of derivative products that get traded on the markets, including even weather and monsoon derivatives, as also many 'exotic' derivatives that are very complex in nature and have not been successful.
A derivative is an instrument whose value is derived from the value of one or more underlying, which can be commodities, precious metals, currency, bonds, stocks, stocks indices among others.
Derivative products have been introduced in a phased manner in India starting with index futures contracts in June 2000. Besides, Index Options, stock options and stock futures were introduced in 2001.
Further, sectoral indices were permitted for derivatives trading in 2002. In 2007, SEBI permitted mini derivative (F&O) contract on Index (Sensex and Nifty) and in 2008, the regulator allowed exchange traded currency derivatives.
