Mumbai: Leading bourse BSE has decided to revise upwards market lot sizes of equity derivatives contracts based on foreign indices—FTSE/JSE Top 40, iBovespa, Micex and Hang Seng.
The move is in line with market regulator Sebi's decision in July to hike the minimum investment size for any equity derivative product to Rs 5 lakh from Rs 2 lakh, to help safeguard small investors from high-risk products. “In pursuance of Sebi guidelines on review of minimum contract size in equity derivatives segment...the market lots of foreign index derivatives contracts shall be revised,” BSE said in a circular.
The market lots, which refers to the number of contracts contained in one derivative security, has been changed for— FTSE/JSE Top 40 Futures, Hang Seng Index Futures, Micex Index Futures and iBovespa Futures.
The stock exchange has increased the lot size of FTSE/ JSE Top 40 Futures to 15 from 10 and would be applicable for new generated and existing contracts, from September 18. FTSE/ JSE index tracks South Africa's 40 highest ranking companies.
Derivative contracts lots on MICEX Index Futures, which is related to 30 stocks of the major and rapidly developing Russian issuers, has been doubled to 300, with effect from September 16. The revised lot would apply for newly generated and existing contracts.
Further, BSE has revised upwards the lot size for Hang Seng Index Futures from 15 to 20. These new market lots for derivatives contracts based on the index measuring the largest and most liquid stocks in Hong Kong, would be applicable for November 2015 and subsequent expiries, from September 30.
For iBovespa Futures, based on index measuring the Brazilian stock market, lots has been increased two times to 10, from October 15. These lots would be for new generated and existing contracts, BSE said.
In 2011, Sebi had permitted stock exchanges to introduce futures and options contracts on foreign stock indices in the equity derivatives segment.
A derivative is a security derived from a debt instrument, share, loan, whether secured or unsecured or any other form of security. It also derives its value from the prices, or index of prices, of underlying securities.