Indian stock market regulator, the Securities and Exchange Board of India, on Tuesday paved the way for Indian investors to trade in large indices of 24 global exchanges, including that of the United States, Europe and Asia.

According to a Sebi circular, Indian stock exchanges will be able to provide trading in derivatives contracts of these global indices.

Interestingly, one of the world's largest bourses, LSE, with whom two Indian exchanges NSE and MCX SX have tied up for cross listing of their indices, is not on the list approved by Sebi for the new guidelines.

"It has been decided to permit stock exchanges to introduce derivatives contracts (Future and Options) on foreign stock indices in the equity derivatives segment," Securities and Exchange Board of India said in a circular.

The index should have a market capitalisation of at least $100 billion and it should consists of at least 10 constituent stocks.

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"No single constituent stock (should have) more than 25 per cent of the weight, computed in terms of free float market capitalisation, in the index," it said.

Sebi further said that after introduction of derivatives on a particular stock index, if that index fails to meet the eligibility criteria for three months consecutively, no fresh contract shall be introduced on that index.

The trading in derivatives on foreign indices would be restricted to Indian residents only.

Last year in March, the National Stock Exchange, the largest stock exchange in India, and CME Group, the worlds leading and most diverse derivatives marketplace announced cross-listing arrangements, including licence agreements covering benchmark indexes for the US and Indian equities.

This had allowed S&P 500 and Dow Jones Industrial Average to trade in NSE, subject to regulatory approvals.

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Besides, the Bombay Stock Exchange has a similar arrangement with Eurex Frankfurt AG, Europe's leading financial futures exchange.

In July last year, the National Stock Exchange and the London Stock Exchange entered into a deal to evaluate the options of cross-listing of key indices on each other's platforms.

In 2009, MCX SX signed such an agreement with FTSE, which is a joint venture between the London Stock Exchange and the Financial Times of the United Kingdom.

"The absolute numerical value of the underlying foreign stock index shall be denominated in Indian rupees. The derivatives contracts on that foreign stock index would be denominated traded and settled in Indian rupees," the circular said.

The Sebi also allowed indices of Tokyo Stock Exchange, Hong Kong Exchanges, among others, to trade on Indian bourses.