US Futures Exchange to license Bombay's Sensex index for futures business
The US Futures Exchange will exclusively license the Bombay Stock Exchange's benchmark Sensex index for dollar-denominated futures trading beginning on February 22 next year.
The Sensex contract will allow eligible US investors to participate directly in India's equity markets for the first time without requiring American Depository Receipt authorisation. Expected market participants include hedge funds and institutions, international mutual funds, and individual investors seeking equity exposure to Indian markets.
The Sensex index is composed of 30 major Indian stocks and is regarded as the country's premier market index. Its value has risen more than 600 per cent since its May 2003 low, reflecting the strong recent growth of the Indian economy. The Bombay exchange currently offers rupee-denominated Sensex futures to qualified Indian market participants.
'Exposure to emerging markets, particularly India, is now essential for institutional portfolio management and retail investors alike,' says US Futures Exchange chairman Kevin Davis. 'This agreement will provide the opportunity for US investors to gain exposure to India's unprecedented economic growth, expansion and investment performance.'
Rajnikant Patel, managing director and chief executive of the Bombay Stock Exchange, says: 'Sensex continues to be the flagship index of the Indian capital market. For millions of investors in India and overseas, it is synonymous with the Indian equity market and is viewed globally as a barometer of the performance of the economy.
'The launch of a futures contract based on the Sensex will facilitate overseas investors in taking exposure to Indian equities. I am confident the listing of the dollar-denominated Sensex contract on USFE will elicit a very positive response from investors.'
The U.S. Futures Exchange Sensex futures contract will trade 23 hours per day and settle monthly to the corresponding value of the Bombay exchange's contract. The contract will have a notional value of 40,000 and a tick size of USD5.
'The Sensex futures product is an ideal fit for USFE's global distribution model and commitment to innovation,' says Satish Nandapurkar, chief executive of the US Futures Exchange. 'Listing the Sensex index will provide US market participants with direct access to pure Indian equities exposure through existing futures accounts.'
Established in 1875 and the oldest stock exchange in Asia, the Bombay Stock Exchange offers trading in the equity (cash and derivatives) and debt (corporate and government securities) segments, listing more than 4,800 companies with a total market capitalisation of USD1.4trn and a total of more than 7,500 securities. The Sensex index has risen by some 39 per cent since May and closed above 20,000 for the first time on October 29.
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