"Sensex futures and options will start trading on the Deutsche Borse. The process of discussion is on and we expect trading to start by the end of 2010," a senior official of the Bombay Stock Exchange (BSE) said.
This will be the first time that the BSE Sensex will be traded outside India. Deutsche Borse AG operates the Frankfurt Stock Exchange, the Europe's biggest exchange in terms of market valuation.
The BSE official, however, ruled out any immediate possibility that the two exchanges would enter into a cross listing agreement.
The BSE's move to tie up with the Deutsche Borse Group comes within months of its rival National Stock Exchange entering into a cross listing arrangement with the Chicago Mercantile Exchange.
The average daily turnover in futures and option market in India is close to Rs 1 lakh crore and NSE has the monopoly in the segment.
In March, the Chicago Mercantile and NSE tied up for cross listing arrangement for index futures. Under the deal, NSE's benchmark Nifty will be available for trade in the US from this month.
The NSE will also provide trading in futures contracts of S&P 500 and Dow Jones Industrial Average (DJIA), two of the world's most influential market indices--for which CME holds the license.
BSE is Asia's oldest stock exchange. Its constituent Sensex, constituted in 1986, has the top 30 companies in terms of market value, which accounts for about 50 per cent of the market capitalisation of the exchange.
In February-March 2007, Deutsche Borse AG and Singapore Exchange Ltd acquired 4.98 per cent each of BSE's shares at the time when the exchange was demutualised.
Currently, six foreign investors hold 25.65 per cent of BSE and five Indian institutions hold 12 per cent.