BSE plans to introduce derivatives trading in NASDAQ 100 index

“We have applied for NASDAQ 100 index options and few other indices to begin with. Once the approval comes, we shall start trading in it,” BSE deputy CEO Ashishkumar Chauhan informed the media

Ahmedabad: Bombay Stock Exchange (BSE), the country’s oldest stock exchange, on Thursday said it plans to introduce trading in derivatives linked to NASDAQ, which will help domestic investors to get exposure to global equity markets.

“We have applied for NASDAQ 100 index options and few other indices to begin with. The talks are at an advanced stage. Once the approval comes, we shall start trading in it,” BSE deputy CEO Ashishkumar Chauhan told PTI.

Mr Chauhan was here to announce the launch of BSE’s Liquidity Enhancement Incentive Programme (LEIP), with focus on derivatives on the bellwether index Sensex and its underlying 30 stocks.

“The idea is to introduce various assets class to the investors and whatever gets attraction, we will work on that,” he said.

BSE has applied to market regulator Securities and Exchange Board of India (SEBI) seeking permission to start trading on options in NASDAQ 100 index and few other foreign indices.

He, however, said, “It is still not very clear what is the appetite for foreign asset class or indices in India.

Couple of years back, investment of $200,000 a year was allowed in foreign indices but not much interest was noticed.”

“India is a growth market, so once people have the facility to diversify to asset classes to whom they are not directly connected, they would participate, especially when its available on a local exchange,” Mr Chauhan said.

The National Stock Exchange (NSE) had last month launched derivative contracts linked to American equity indices—Dow Jones Industrial Average (DJIA) and S&P 500. It was the first such contract on global indices to be launched in India.

Meanwhile, speaking about the LEIP, Anil Shah, a member of the BSE governing board said, “The scheme is expected to increase derivative turnover of the exchange from existing around Rs100 crore per day to over Rs35,000 crore per day, within 15 days of its launch in October.”

“We expect at least 25% to 30% participation in this scheme from Gujarat,” Mr Shah said.

“Over 100 members have shown commitment so far to participate in this scheme, and another 400 are expected to join gradually as we move ahead,” he added.

BSE will pay incentives worth Rs5 crore in the first phase of the two-tier series of LEIPS-I (Beta) to the participating members.

In the second phase of the programme (or series LEIPS-II), incentives to the tune of Rs102 crore (Rs17 crore on a monthly basis) would be paid out to all participating members.

The LEIPS-I (Beta) will run from 28 September to 25 October 2011 and LEIPS-II will commence on 26th October and run for six months.

User

Govt allows companies to raise $1 billion of ECBs in yuan

The decision to allow companies to raise yuan (renminbi), (equivalent of $1 billion) as an acceptable currency under ECB will benefit infrastructure firms like ADAG Group company Reliance Power and Lanco Infratech

New Delhi: In significant policy shift, the government on Thursday decided to allow corporates to raise external commercial borrowings (ECBs) in yuan (renminbi) equivalent to $1 billion, a move that will help companies trading with China, reports PTI.

“For the first time we are allowing yuan (renminbi), (equivalent of $1 billion) as an acceptable currency under ECB, basically for infra and capital goods,” Department of Economic Affairs secretary R Gopalan told reporters after a meeting of the high-level coordination committee on ECBs.

Giving rationale for the decision, he said, “Yuan wants to play much bigger role...certainly there is market for it.”

The decision to allow companies to raise ECBs in yuan will benefit infrastructure firms like ADAG Group company Reliance Power and Lanco Infratech.

Although the committee did not raise the overall ceiling of ECB which is currently at $30 billion, it did decide to relax the norms and raise the borrowing limits for various sectors to help the companies obtain funds from overseas markets at competitive rates.

Out of the total limit of $30 billion, ECBs amounting to $15.93 billion have been raised by the companies until August 2011.

The government, Mr Gopalan said, will also be looking at the possibility of reducing withholding tax on the ECBs.

“Withholding tax will be brought down, we are interacting with department of revenue,” he added.

The decision to relax ECB norms follows the suggestions made by top industry leaders at a meeting last month with finance minister Pranab Mukherjee to boost the economy.

The limit of external borrowings with tenure of five years or more under the automatic route has been increased from $500 million to $750 million. The decision will help the companies across all segments to access higher quantum of overseas funds, he said.

For the services sector, Mr Gopalan said, the ECB limit under the automatic route has been doubled to $200 million and for NGOs from $5 million to $10 million.

Referring to the overall ECB ceiling, he said, “If there is a requirement for additional money through ECBs, particularly in infrastructure sector, we can go beyond the $30 billion limit depending upon the requirement...We are quite positive. The cap remains at $billion 30 billion but this can be relaxed depending upon the requirement.”

On allowing high networth individuals (HNIs) to invest in infrastructure debt funds, he said, “The committee held a view that HNIs ... be permitted to invest in infrastructure debt funds without any ceiling under the ECB route.”

As regards refinancing of rupee loans through ECBs, he said, 25% of the amount raised from overseas sources could be used to repay debts for infrastructure sector projects.

The refinancing of buyers/suppliers credit through ECB, he added, would be permitted for infrastructure sector projects or capital goods segment.

On allowing ECBs for slum rehabilitation project around Mumbai international airport, he said, “The view was that we should not fuel real estate boom through ECB route, therefore it is not being permitted.”

User

Health insurance portability from 1st October

The scheme was proposed to come into force from 1st July earlier, but was deferred for three months due to certain outstanding issues with insurance companies

New Delhi: Health insurance portability service, which would allow policy holders to switch insurers, is all set to be implemented from 1st October, the Insurance Regulatory and Development Authority (IRDA) said on Thursday.

The scheme was proposed to come into force from 1st July earlier, but was deferred for three months due to certain outstanding issues with insurance companies, reports PTI.

“We are ready to implement the health portability plan from 1 October 2011,” IRDA chairman J Hari Narayan said here on the sidelines of a CII meet here.

Health portability will allow consumers to change their service provider without loosing the basic coverage of health insurance. As per portability rules, consumers will get credit for the time already spent for covering the pre-existing disease along with bonus accrued to him from his past insurer.

On the highest net asset value (NAV) guaranteed products, which are seen as a “risk products”, Mr Narayan said IRDA was planning to come up with regulations for it.

“The concern, which I have as regulator is the communication mechanism for highest NAV product that might lead to misconception of the buyer. Therefore, it is a risky product. We are getting details about the matter and we will take a regulatory decision soon,” he said without giving a timeline by when the rules would be out.

The highest NAV guaranteed products give consumers a guaranteed return based on the highest NAV that the policy has achieved during the entire term of the insurance plan.

At present, around 20% of the total Unit-Linked Pension Plans (ULIP) comprise sales from highest NAV products.

Referring to the IPO guidelines for life insurance companies, Mr Narayan said the guidelines are almost final.

“IPO guidelines are ready as far as IRDA is concerned. However, there are two more nuts that have to be tied up. First is the requirement of comments from Securities and Exchange Board of India (SEBI), which will come up in a day or two. Second is about a particular matrix for calculation of embedded value (of the company) that will be prescribed by Institute of Actuaries of India,” he added.

IRDA has already issued draft IPO guidelines.

According to industry body CII, India’s health insurance market is expected to touch Rs70,000 crore with a coverage of 500 million people by 2020.

User

We are listening!

Solve the equation and enter in the Captcha field.
  Loading...
Close

To continue


Please
Sign Up or Sign In
with

Email
Close

To continue


Please
Sign Up or Sign In
with

Email

BUY NOW

The Scam
24 Year Of The Scam: The Perennial Bestseller, reads like a Thriller!
Moneylife Magazine
Fiercely independent and pro-consumer information on personal finance
Stockletters in 3 Flavours
Outstanding research that beats mutual funds year after year
MAS: Complete Online Financial Advisory
(Includes Moneylife Magazine and Lion Stockletter)