As per SEBI guidelines foreign stock indices meeting the criteria mentioned below are eligible for introduction of derivatives by stock exchanges. The stock exchanges shall submit the risk management framework along with
their application to SEBI. On approval, stock exchanges shall
introduced derivatives on foreign stock indices.
Eligibility Criteria for derivatives on a foreign stock index:
Sr. No.
Conditions
1
Derivatives on that Index is available on any of the stock exchanges listed at Annexure A
2
In terms of
trading volumes (number of contracts), derivatives on that Index
figure among the top 15 Index derivatives globally.
OR
That Index has a market capitalization of at least USD 100
billion.
3
That index is “broad based”. An Index is broad based if :
The Index consists of a minimum of 10 constituent stocks and
No single constituent stock has more than 25% of the weight, computed in terms of free float
market capitalization, in the Index.
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