To attract retail investors into the ever-growing derivatives market, the Bombay Stock Exchange will launch 'Sensex mini derivatives contracts' from January 1, 2008.

The small size of the contract would woo retail investors, as there would be comparatively lower capital outlay, trading costs, more precise hedging and flexible trading, a BSE release said.

The mini derivatives contracts would be in a market lot of five, it added.

It is a step to encourage and enable small investors to mitigate risk and gain easy access to India's popular index, Sensex, through futures and options, the release revealed.

The security symbol for Sensex mini contracts would be MSX and would be available for one, two and three months along with weekly options.

Market watchdog Securities and Exchange Board of India has approved introduction of seven new derivative products for the domestic market. "The introduction of these products is a step intended to progressively encourage markets to move onshore," SEBI had said.

SEBI had allowed trading in mini contracts on index (BSE 30-share Sensex and NSE 50-share Nifty) with a minimum contract size of Rs 1 lakh (Rs 100,000).