The Bombay Stock Exchange (BSE) relaunched Sensex and Bankex derivative contracts on Monday in its bid to boost derivative trading at the exchange. The relaunch of derivative contracts comes with a reduced lot size of futures and options and a new expiry cycle of Friday from Thursday earlier, BSE said.
Derivatives are the type of financial contracts whose value is dependent on an underlying asset, group of assets, or benchmark. A derivative is set between two or more parties that can trade on an exchange or over the counter (OTC). Derivatives are usually leveraged instruments, which increases their potential risk and reward. Usually, they are used to hedge against the risk against the assets in the equity markets.
“We are relaunching two contracts—Sensex and Bankex. Sensex is a well-known benchmark and a barometer of India’s economy. It has good performance and a good volatility profile,” BSE’s Managing Director and CEO Sundararaman Ramamurthy said at the relaunch event on Monday.
The lot size of futures and options has been reduced to 10 from 15 for Sensex, and to 15 from 20 in case of Bankex, according to BSE.
While speaking to the Siddharth Zarabi, Managing Editor of Business Today TV, S Ramamurthy said that there are two things, first to tweak and make the already existing products better. Second, management is always in search of new things. “Immediate areas which could probably take the BSE management’s attention after the success of the Sensex and Bankex derivative contracts would be new indices,” he added.
He also stressed on how BSE could make it self-useful by providing timely and authentic source of data. He said data is available, but is it timely or authentic, no one knows, data could be used or misused by anyone.
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