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Posted by Shyam as Market News
The large indices consisting of exchanges such as Europe, US, Asia have a total of 24 global exchanges. And now, it has been allowed by Securities and Exchange Board of India (SEBI) for India as well to be a part of those large indices, which implies that from now on even Indian investors will be able to participate in the global exchange.
It is the derivative contracts (Future and Options) to get permission to be on the list of the derivative segment of the index.
NSE and MCX SX, the two exchanges of India had made deals with London Stock Exchange (LSE), one of the largest stock exchanges in the world, to be able for cross-listing in the global exchange. Interestingly, SEBI denied the permission to LSE to be a part of the list.
There are some conditions imposed by SEBI to be met by the derivatives which are:
* After getting the permission, if the stock exchanges won’t be able to meet the eligibility criteria for a period of consecutive three months, then there will not be any new contracts signed with that particular stock index.
* In terms of the market capitalization, a maximum of 25% of weight is permissible for a stock index
* Only Indian residents are allowed to trade
CME Group and NSE, India’s largest bourse, tied links and made agreements with LSE last year. Dow Jones Industrial Average and S&P 500 thus got a chance to trade in NSE. Similarly, BSE has cross-arrangements with Europe’s leading bourse, Eurex Frankfurt AG. MCX SX too made such arrangements for cross-listing in 2009 with London exchange’s benchmark index FTSE (a joint undertaking of NSE and the Financial Times of the UK).
Besides, the exchanges permitted by SEBI to trade in Indian stock exchange are Hong Kong Exchanges and Tokyo Exchange.
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