By BS Reporter
Index futures trading is gaining ground on the Bombay Stock Exchange (BSE). The futures of key equity index BSE Sensex have gained around 20-24 per cent market share, compared to the National Stock Exchange's Nifty index, in the past couple of trading sessions. Till now, Nifty was the most popularly traded index futures in India.
According to data from the BSE, Sensex futures worth over Rs 1,900- Rs 2,000 crore were traded last week on Thursday and Friday, compared to Nifty futures worth Rs 8,000-Rs 10,000 crore.
This is the first time in the history of BSE that Sensex futures have seen such huge trading volumes, since it was launched in 1986. India's top 30 companies, with a market-capitalisation of over Rs 26.30 lakh crore, are Sensex components. The index covers more than 20 sectors of the Indian economy.
The volumes were picking up on the back of a derivative-incentive scheme launched by the BSE in September, this year. Market players say the real test of BSE would be if it is able to sustain these volumes post the incentive scheme. According to Securities and Exchange Board of India (Sebi), an exchange can run the scheme for six months. The BSE board has approved to spend around Rs 100 crore on the same. Thus, brokers generating volumes on the exchange are currently being paid out of BSE's pocket. Around 300 stock brokers had registered with BSE for derivatives trading.
"If BSE is able to corner at least 20-25 per cent market in the overall equity-derivative segment before the end of its incentive scheme, the exchange would be able to sustain and even grow the segment. Looking at the way trading volumes are rising on BSE it seems that they would gain a sustainable market share," said a Mumbai-based stock broker.
However, overall equity derivative volumes traded on BSE are quite small compared to NSE. On BSE, around Rs 2,900-crore equity derivatives were traded on a single day, last week compared to NSE's volume of more than Rs 1,00,000 crore. Index and stock options contribute to a major portion of turnover on NSE. On BSE, options worth about Rs 600 crore have been traded in a single day. Also, another growing concern for BSE is that volumes in its cash segment have come down substantially.
Futures contract of NSE's index Nifty listed overseas on Singapore Stock Exchange have been a big hit with institutional investors, while Sensex has failed to pick-up on Eurex bourse in Germany.
Currently, BSE is competing with NSE to gain market share but it is also preparing to take care of competition from Financial Technologies promoted MCX SX. MCX SX, which plans to launch equity trading on its platform, was engaged in a court battle with Sebi for a licence to operate as a full fledged stock exchange. The case is at its fag end and a decision to allow MCX in equity trading would be out in the next few months.