Want to bet on foreign stock indices? Take your pick

Those looking to trade and take directional calls on foreign stock indices through rupee denominated derivatives contracts now have more choice.

The National Stock Exchange, the country’s leading exchange, had in March last year tied up with Chicago Mercantile Exchange (CME) group for listing of futures based on S&P 500 & Dow Jones indices.

And on Tuesday, Bombay Stock Exchange (BSE), the oldest exchange in the country, announced that it has signed a licensing agreement with the International Securities Exchange (ISE) to launch a host of new innovative derivative products.

The BSE is considering introduction of index futures and options based on broader market and emerging market themes.

“We are looking at products that would make sense and appeal to Indian investors. We need to first talk to market participants to get their feedback and also provide for market making before we approach Sebi to get the regulatory approval,” said Sayee Srinivasan, head of product strategy at the BSE.

The ISE, which operates the US’s leading options exchange, offers products such as ISE 250 index that tracks the top 250 US stocks trading on the NYSE, Amex and Nasdaq, apart from emerging market themes like ISE Chindia Index.

The BSE move comes after the market regulator in January 2011 allowed stock exchanges to introduce rupee-denominated derivatives contracts based on the indices of 24 foreign stock exchanges. The list included offerings from American exchanges such as the Chicago Board Options Exchange, Chicago Mercantile Exchange (CME) group, Nasdaq OMX and ISE; Australian Securities Exchange, Hong Kong, Korea and Singapore Exchanges in Asia Pacific region; and Eurex and Borsa Italiana from Europe.

Investors may also get to trade in Nasdaq futures sooner than later.

During the recent launch of India’s first US equity ETF based on Nasdaq 100, Robert J Hughes, managing director (index services) of Nasdaq OMX Global Index Group, said they were looking forward to launch of futures product here.

“SEBI has already given go-ahead for derivatives trading and we are working with CME for getting the futures based on Nasdaq group indices listed here in India,” said Hughes.