When market participants spotted the moneymaking opportunities by combining options with futures, it helped growing options volume also, says Sandeep Singal, Head _ Derivatives, SSKI & Sharekhan, Mumbai.
One
of the most prominent recommendations was that various
derivative products should be introduced in the
following sequence only, that is Index Futures, Index
Options, Stock Options and then Stock Futures.
Thereafter, a committee under the chairmanship of
Prof. J R Varma gave the fine print of risk management
of these products. At this time everything was in
place to start derivatives trading. It was the Winter
Session of XIII Lok Sabha, Tuesday, November 30, 1999,
when Securities Contract Regulation Act (SCRA) was
amended to include `derivatives' within the scope of
definition of Securities. This landmark amendment
paved the way for the launch of equity derivatives in
India.
June
2000, Indian Capital Market celebrated an historic
moment with the beginning of trading in futures on
Nifty and Sensex. The derivatives market should have
been a big success right from this point, had the
results of survey conducted by LCGC were true. Be it
retail institutions or mutual funds everybody wanted
derivatives. But when it was launched, hardly anybody
seemed interested. Though there were lots of swings in
the index, traders were not interested to look at this
instrument. Market participants were busy trading the
high volatile technology stocks. The volumes were
lackluster, less than 100 crore daily. Though there
were lots of other reasons, without going into the
nitty-gritty of the causes, it is safe to conclude
that derivatives market was a non-starter. |
