Derivative trading in equity indices and currency segment has put the domestic stock exchanges in the league of top global players. The National Stock Exchange (NSE) has emerged as the leading currency bourse in terms of number of contracts traded and second largest for futures and options of equity index trading. The Bombay Stock Exchange (BSE) is now the fifth largest exchange for index options trading globally.
According to recent data of the World Federation of Exchanges (WFE), in terms of number of contracts traded every month, NSE is ahead of US based Chicago Mercantile Exchange group in currency trading. In equity index derivative, NSE is ahead of Nasdaq and NYSE Euronext of US and Eurex of Europe. The Korea Exchange (KRX) of South Korea is the world's largest exchange for derivative trading in equity indices.
In May, 81.45 million contracts of index future and option were traded on NSE compared to nearly 60 million traded in April this year. On BSE 24.24 million contracts were traded in May in index derivative segment. During the same period, little over 238 million index derivative contracts were traded on KRX.
| BOURSE BEHEMOTHS Weekly food inflation rate calculated year-on-year | |
| Number of Index F&O contracts traded in May | |
| Exchange | (mn) |
| KRX | 238 |
| NSE | 81 |
| Eurex | 39 |
| CBOE | 29 |
| TAIWAN | 10 |
| No. of currency futures contracts traded in May | |
| Exchange |
(mn) |
| NSE | 2.1 |
| CME | 1.1 |
| Tel Aviv | 0.6 |
| Source: World Federation of Exchanges | |
Both NSE and BSE have been among the top ranker's in world this year on the back of strength in options trading. In 2011, NSE was behind CME Group, Eurex and RTS of Russia in terms of index futures trading and was in the second place during the same period in index options trading.
While NSE is neck-on-neck in currency segment with India's third stock exchange MCX SX, WFE does not compile monthly data for the latter exchange as it is not a member of the federation yet. MCX SX said its membership application is pending with WEF for long time now. In the month of May, NSE's turnover in currency segment was higher by Rs 99 crore than that of MCX SX. In April, MCX SX was the leading player in this segment in the country. Competition is emerging for domestic exchanges from Dubai Gold and Commodity Exchange (DGCX), which is the only exchange outside India to trade in Rupee. The average daily volumes in rupee-dollar futures have risen from a few hundred crore to over Rs 2,000 crore.
Recently, there has been a growth in trading volumes of NSE's Nifty index futures on the Singapore Stock Exchange (SGX).
The open interest positions on SGX in Nifty futures are more than that of NSE. Market players say this is due to high statutory costs and other tax related issues for trading in India. For BSE, the market making scheme launched by it last year has been a catlyst and the exchange has so far spent more than Rs 60 crore out of the Rs 107 crore that it had sanctioned for reviving the derivative segment. Also a grey area is that trading in interest rate futures and global indices listed on NSE has been a non-starter so far. BSE promoted currency exchange United Stock Exchange (USE) is in poor shape after spate of recent controversies and dwindling volumes.
However, Indian exchanges are far shallow when it comes to derivative trading of single stock. In this segment the US and European exchanges dominate, which shows wider participation and robust market depth there. Also, when the criteria is changed to trading turnover in equity index trading, NSE is trailed by CME group and Deutsche Borse and SIX Swiss Exchange owned Eurex, the market leaders in equity trading segment. Still analysts mostly look at contracts traded to know market depth in a particular country as calculation of turnover may widely differ due to sharp difference in currency rates.
