Indian investors can trade in global indices

As per a Sebi circular, Indian exchanges will be able to provide trading in derivatives contracts of these global indices.

Interestingly, LSE, with whom two Indian exchanges NSE and MCX SX have tied up for cross listing of their indices, is not on the list approved by Sebi for the new guidelines.

“It has been decided to permit stock exchanges to introduce derivatives contracts (Future and Options) on foreign stock indices in the equity derivatives segment,” Sebi said in a circular. The index should have a market capitalisation of at least $100 billion and it should consist of at least 10 constituent stocks.

“No single constituent stock (should have) more than 25 per cent of the weight, computed
in terms of free float market capitalisation, in the index,” it said. Sebi further said that after introduction of derivatives on a particular stock index, if that index fails to meet the eligibility criteria for three months consecutively, no fresh contract shall be introduced on that index.

The trading in derivatives on foreign indices would be restricted to Indian residents only.

The Sebi today also allowed indices of Tokyo Stock Exchange, Hong Kong Exchanges, among others, to trade in Indian bourses.