Eight months on, NSE yet to start trading of US indices

Rupee convertibility issue yet to be resolved

BY Siddharth Kumar
Delhi

A DEAL NSE and the Chicago Mercantile Exchange had signed a cross-listing agreement in March this year.

Investors in India wishing to bet on Dow Jones Industrial Average (DJIA) and the Standard & Poor's (S&P) 500, the world's two most-tracked equity indices, may have to wait for some more time.

This is because the National Stock Exchange (NSE), where the future contracts on these US indices were to be traded, is yet to announce a timeframe for their introduction.

Industry experts believe regulatory approvals from the Reserve Bank of India (RBI) may be a reason for the delay.

"Since in this case the matter of rupee convertibility is also involved, it may come under the review of central bank also," said Sandeep Parekh, a former Securities and Exchange Board of India (SEBI) executive director and founder of Finsec Law Advisors.

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

NSE and the Chicago Mercantile Exchange (CME) had signed a cross-listing agreement in March this year.

Under the deal, DJIA and S&P 500 could be traded on NSE and Nifty -- the benchmark index of the NSE -- would be traded on the CME.

Several calls made to the SEBI spokesperson remained unanswered.

CME owns the rights for S&P 500 and DJIA and has given the licence to NSE for trade in futures contracts in India.

While the dollar-denominated derivatives contracts on Nifty have already been traded in the US, NSE is yet to start similar contracts on the American indices in rupee denominations on its platform. Almost eight months have passed on since the two bourses inked the cross-listing agreement.

Replying to a questionnaire, an NSE spokesperson said: "The agreement between the two exchanges won't be scrapped."

The spokesperson did not give any further details on when the trading would start.

In July this year, the CME has introduced two new contracts -- E-mini and E-micro S&P CNX Nifty Futures -- on its platform designed to access Indian market opportunities.

Investors can trade for nearly 23 hours on the CME Globex. These hours include the market hours in India except the last hour before the Indian market opens.

"The introduction of these two contracts will make Nifty available to a larger community of traders and investors across various exchanges and time zones," NSE Chief Executive Officer and Managing Director Ravi Narain had said earlier.

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