Futures options contracts of the Sensex -- India's popular blue-chip index, owned by the Bombay Stock Exchange -- will start trading in Europe from Monday. It will be country's first equity index to be traded there.
In Europe, the Sensex will be traded on the Eurex, the region's derivative leader, controlled by German operator Deutsche Börse and SIX Swiss Exchange AG.
The global liquidity network of Eurex comprises 417 direct exchange members in 25 countries. It dominates trading in indices such as the Eurostoxx 50, Dax and SMI Swiss index, as well as German and Eurozone equity options on single stocks.
Over 9.9 million derivative contracts of various indices and stocks were traded on the Eurex platform in September. Globally, it is considered one of the Big Three derivative exchanges, along with NYSE Euronext Liffe and Chicago Mercantile Exchange.
This is a major step forward for the BSE, Asia's oldest bourse, to revive its dormant equity derivatives segm-ent, where the National Stock Exchange has a monopoly, with an aver-age daily turnover of over Rs 1 lakh crore (Rs 1 trillion).
Currently, NSE's key index, the S&P CNX Nifty, is traded on the Singapore Stock Exchange in Asia and CME in the US.
In Europe, NSE has expressed its intention to launch Nifty options contracts on the London Stock Exchange, ranked a distant third after the Eurex and Liffe.
The Sensex may have a first-mover advantage over Nifty in Europe, said market players.
Interestingly, the Sensex will be trade from 7.50 am Central European Time for 22 hours on the Eurex, which will effectively capture the trading hours of Europe, the US and Asia.
The Eurex will offer two market-making schemes for the index: one to support liquidity during the overlap of Indian and European trading hours, and a permanent scheme in Sensex options contracts.
The contracts will be dollar denominated and settled in cash.
The lot size of Sensex F&Os on Eurex will be one, and the value will be as per the value of the index. This means one lot would be of $20,000, if the index is trading at a level of 20,000.
"We are banking on strong distribution and the successful track record of the Eurex to build deep and liquid derivative products.
"Traders across the world, who want to take positions on Indian markets, will benefit from the extended trading hours of the Sensex," said Sayee Srinivasan, BSE's head of product development.
