Stock Exchange BSE has sought approval from market regulator SEBI to introduce 2-3 and the monthly derivative contract of indices. People associated with the developments said that these include the recently started BSE 150 index and some thematic indices.
This approval will be important for the exchange to get market share in the futures and option segments. Sources indicated that it may take some time to get the regulator approval as several regulatory changes and proposals are being worked on with F&O, including limiting delta calculations and expiry to two days.
Since September 2024, the exchange has introduced 20 indexes based on market capitalization, weightage and sector classification. These include BSE 1000, BSE focused midcap, BSE 250 microcap, BSE PSU Bank, BSE focused IT etc.
The indices can be used in the operation of passive schemes such as mutual fund schemes, benchmarking of PMS strategies and exchange traded funds (ETFs) and index funds. A benchmark per exchange for weekly expiry under SEBI criteria can be placed, but monthly contracts are allowed for several indices.
In order to be eligible for a monthly contract in the derivative segment of an index, shares contributing to 80 per cent weight of the index should be eligible for derivative trading. Apart from this, the share which is not eligible for F&O should not have more than 5 percent weight in the index. Several other conditions have to be met before SEBI approval. Currently, the BSE has three indexes-Sensex, Banckes and Sensex-50 with monthly contracts trading.
In response to the email question, the BSE spokesperson said, “The work of developing such schemes and services with the BSE regulator, which meet the growing demand of the market, is continuing. It is a continuous and consulting process that varies according to the dynamic nature of the capital market. The questions sent to SEBI were not answered about exchanges seeking to increase their offers in the derivative section.
According to analyst reports, BSE’s index option premium market share increased from 16.4 per cent in December 2024 to about 22.1 per cent in February 2025.
First Published – May 1, 2025 | 10:35 pm IST
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