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March 30, 2001
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Money > Business Headlines > Report March 30, 2001 |
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NSE confident on April options kickoffSangita Shah The National Stock Exchange (NSE) will introduce options trading by mid-April. The bourse will announce the date in the next couple of days. Ravi Narain, managing director of the NSE, said the bourse were giving fair amount of time to investors and brokers to absorb the idea and awareness about options trading. "We have conducted roadshows in all the metropolitan cities and now we are ready to launch the product," he added. NSE's plans to launch options in January was derailed after the Securities and Exchange Board of India (Sebi) insisted on the installation of the 'SPAN' risk management system for options trading, the most popular system worldwide. "This system has to be purchased," Narain said. NSE, which had developed its own risk management system had been asked by the authorities to rework it in line with the system at the Bombay Stock Exchange (BSE).The BSE had entered into an agreement with the Chicago Mercantile Exchange (CME) to adopt its risk management system for options trading. It is worth mentioning that in its 103-year history, CME never had a default of a clearing member firm. The Chicago Mercantile Exchange uses sophisticated risk management and financial surveillance techniques to protect exchange members and customers from default on futures and options contracts. The exchange clearing house guarantees contract performance. After each trade is verified, the clearing house acts as the third party to every trade (the seller to every buyer and the buyer to every seller), thus ensuring the integrity of all trades. The exchange is financially backed by its clearing members as well as a special trust fund. This combination provides unparalleled safeguards for the protection and benefit of all CME market users. In the entire history of the Chicago Mercantile Exchange, there never has been a default or failure resulting in a loss of customer funds.
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