G-20 ministers back India's proposal on bank regulation: FM

Mr Mukherjee advised European and American policymakers to follow regulatory mechanism on the lines of the Indian banking system

India's proposal to regulate banks instead of imposing a tax to fund future bailouts was "by and large accepted" at the recently concluded meeting of G-20 Finance Ministers in South Korea, reports PTI.

Finance minister Pranab Mukherjee, who returned from Busan yesterday, said here that India had suggested to the rich nations that it was better to regulate banks through policy instruments like the cash reserve ratio (CRR) rather than imposing a tax.

CRR is the portion of deposits that banks are required to keep with the central bank.

"On the financial regulation, we are not in favour of having taxation on the banks. We suggested that ultimately you please take it up through the regulatory route... By and large it was accepted," he said.

Mr Mukherjee advised European and American policymakers to follow regulatory mechanism on the lines of the Indian banking system.

India, Australia and Canada are opposed to the proposal to tax banks to fund the cost of future bailouts and financial institutions while the European Union (EU), the US, and Britain are in its favour.

Referring to the risks that the crisis in Greece could pose to the global economy, the finance minister said, "It is Europe's responsibility to contain the contagion...because faster recovery in Europe is essential for the developing countries both for foreign direct investment (FDI) and exports."

Europe accounts for 20%-22% of India's exports of about $176 billion.

Mr Mukherjee conveyed it to the finance ministers and the chiefs of the central banks of the 20 most influential countries in the world that the global recovery was still fragile.

"We analysed the overall global financial situation, and in that context I gave my perception that still the recovery is fragile. In between, the events in the euro zone, particularly the crisis in Greece, have taken place," he said.

The G-20 Finance Ministers meeting took place weeks ahead of the summit of the grouping, which will be attended by prime minister Manmohan Singh in Canada.
 

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NSE set to launch futures contract in S&P 500

This will be the first time that a global index like S&P 500 will be trading anywhere outside the US

The National Stock Exchange (NSE) is set to launch futures contracts in the S&P 500 Index on its platform, which will enable Indian investors to take exposure to the most-actively traded futures contract in the world, reports PTI.

Standard and Poor's (S&P) is helping the country's largest bourse to market the S&P 500, which is expected to start trading on the NSE soon.

The Chicago Mercantile Exchange (CME), which owns the rights to S&P and Dow Jones Industrial Average, has given the licence to NSE to start trading in futures contracts on the index.

According to NSE officials, CME will launch futures trading in the Nifty 50, the benchmark index of Indian bourse, from 19th July.

NSE has tied-up with S&P to help NSE create awareness about the index, especially because the target audience is different, said an exchange official.

"To attract the large retail investor population in India (60%-65% of NSE investors are retail investors), the exchange will be designing special contracts, which are smaller in size," said an NSE official.

This will be the first time that a global index like S&P 500 will be trading anywhere outside the US.

"Since futures contracts are traded for 23 and a half hours on CME Globex, the fact that S&P 500 will be trading here in a different time zone, will not be a problem.

"The price discovery will be continuing for those entire 23 and half hours," said another official involved in the process.

When asked about the possible timeframe for the launch of S&P 500 futures in India, the NSE spokesperson told PTI that the exchange is awaiting regulatory approval and is hopeful to start the same soon.

Domestic brokerages and investors are keenly awaiting the launch, analysts said.

"The platform will be a good thing for Indian investors and the response to it would be enthusiastic," Unicon Financial CEO Gajendra Nagpal said.

In March this year, NSE and CME entered into an agreement for cross listing of the benchmark indices.

A futures contract is an agreement that allows an investor to bet on the underlying asset-an index or stock-for a pre-determined price and period.

Today, NSE is the largest exchange in India in the cash and equity derivatives. It is also the fourth largest in the world in terms of trading volume in the cash market.

NSE features among the top 10 derivative exchanges in the world in terms of the number of contracts traded and cleared in equity derivatives. In Asia, only the Korean exchange is ranked higher.
 

 

 
 

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Financial goals

South Africa is spending $52 billion on the World Cup. Will that be money well spent?

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