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India halves margins on single stock trades
09 July 2010
The Securities and Exchange Board of India said this week that it was halving the minimum margins that exchanges require of traders in Indian single stock futures and options.
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India
Securities and Exchange Board of India
equity derivatives
futures
options
single stock
National Stock Exchange
Bombay Stock Exchange
Mumbai
From July 15, exchanges must require at least 5% of the contract’s notional value, instead of 10%. That rate was imposed in October 2008 after the Lehman Brothers collapse.
The SEBI took the decision after discussions with market participants.
An executive at a futures commission merchant in Mumbai welcomed the decision, saying the higher margins had hit the retail market hardest and depressed trading of single stock futures and options.
In 2008, some 225.72m single stock futures and options were traded, but this fell to 161.05m trades in the following year.
The National Stock Exchange of India hosts 99% of listed single stock derivative trading in India. Its rival the Bombay Stock Exchange had hoped a more attractive fee structure, introduced in December 2009, would help it win back market share, but it has so far been unsuccessful.
Colin Packham, Sydney cpackham@fow.com