Mumbai: Vikram Limaye, managing director and chief executive officer of National Stock Exchange of India Ltd (NSE), said retail investors in India are aware of the risks associated with trading in equity derivatives.The entire market is traded on exchange platform and according to data, 95% of retail investors are professional traders.
Limaye was speaking at a press conference after unveiling a report on ‘Future of Clearing’ by World Federation of Exchanges (WFE).
The NSE chief was seeking to address concerns that India has considerable high volumes of equity derivatives and retail investors trade in these contracts.
“Our entire equity (derivatives) market is exchange traded so there is enough transparency and price discovery. Even margining as compared to the world over is real time at client level. Margins as also tweaked time to time depending on the market conditions. So, the risk management is sound. As far as retail investors are concerned, 95% of them can fall in the accredited investor category. They are not new traders and are professional traders and have a certain risk capital," said Limaye.
He also said NSE and Singapore Stock Exchange (SGX) have submitted a proposal to Securities and Exchange Board of India (Sebi) and Monetary Authority of Singapore (MAS) to end offering the SGX-Nifty contract and offer a similar product to foreign investors through Gujarat International Finance Tech (GIFT) City.
The report on clearing corporations said there is a need to ensure clearing corporation’s central role as neutral and independent risk managers through implementation of G20 standards. It also highlighted that even with the world exploring blockchain technology, the role of clearing corporations will still be there.
“Exchanges world over are engaged in studies to understand whether it will improve systems. There are crypto currency platforms present today but they cannot be called as exchanges as they still do not conform to our standards," said Nandini Sukumar, CEO, WFE.