NSE to launch derivatives on the Nifty Financial Services Index from January 11, 2021

Money Control

NSE to launch derivatives on the Nifty Financial Services Index from January 11

The exchange will offer futures and options in 7 serial weekly, excluding the monthly expiry and 3 serial monthly contracts, NSE said.

10 December 2020

National Stock Exchange of India (NSE) on December 10 said it had received SEBI's approval to launch derivatives on the Nifty Financial Services Index.

NSE will launch the index derivatives on the Nifty Financial Services Index from January 11, 2021.

"NSE has received approval from SEBI to launch derivatives on the Nifty Financial Services Index in the futures & options segment of the Exchange. Currently, NSE offers index derivatives on only two equity indices – The Nifty50 index and the Nifty Bank index," the exchange said in a statement.

The exchange will offer futures and options in 7 serial weekly, excluding the monthly expiry and 3 serial monthly contracts, NSE said.

"This is the first time that the Exchange will make available weekly futures for the stock index derivatives. The derivatives are cash-settled with expiry day being the last Thursday of the expiry month for the monthly contracts and Thursday of the expiring week for weekly expiry contracts," NSE said.

The option contracts are European styled Call Option (CE) and Put Option (PE) with strike scheme of 30-1-30 and strike interval of 100, said the exchange.

The financial services sector assumes significance as the sector accounts for 33.5 percent of the Nifty500 index.

The Nifty Financial Services index comprises 20 stocks and is designed to reflect the behaviour and performance of the Indian financial market which includes banks, financial institutions, housing finance, insurance companies and other financial services companies, the statement further said.

NSE underscored that recent investment data of Foreign Portfolio Investors (FPIs) indicates 48 percent of new investment flows were into the financial services sector.

The sector accounted for 35 percent of the assets under the custody of FPIs. Many of the asset management companies have mutual fund schemes in the financial sector theme.

The Nifty Financial Services index has a 94 percent correlation and a beta value of 1.2 with the Nifty50 index. It has a correlation of 98 percent with the Nifty Bank index.

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