Capital markets regulator Sebi permitted stock exchanges with commodity derivative segment to introduce futures on indices. The stock exchanges, willing to start trading in futures on commodity indices, are required to take prior approval for launching such contracts, Sebi said in a circular.
“Exchanges will have to submit at-least past 3 years data of the index constructed along with data on monthly volatility, roll over yield for the month and monthly return while seeking approval from Sebi,” the circular added.
The regulator has already permitted commodity options in commodity derivative markets. Construction of commodity indices should conform to the guidelines prescribed by Sebi.
Constituent futures contracts should be in existence on the respective exchange for at least previous twelve months and should have traded for at least 90% of trading days in last twelve months and have a minimum average daily turnover.
The turnover should be at least Rs 75 crore for agricultural and agro-processed commodities, and Rs 500 crore for all other commodities, Sebi said. The size of the contract has to be at least Rs 5 lakh at the time of the introduction in the market with an initial maximum tenor of 12 months.