Indian investors can now access US bourses, thanks to NSE move

Thursday, March 11, 2010, 12:25 by Business Editor

Dow Jones Industrial Average (DJIA) and S&P 500 futures contracts trading for Indian investors from NSE

Here’s some encouraging news for Indian investors who are looking to go global.

The National Stock Exchange (NSE) has lined up measures to kick start trading in futures contracts of Dow Jones Industrial Average (DJIA) and S&P 500. By deciding to trigger futures trading in these two key indices of the US stock market, the NSE would be opening the doors for the investors in India to access the US bourses in a major way.

Apart from the DJIA and S&P forays, Nifty, the NSE benchmark index that has on its profile the country’s top 50 companies, will be seen hopping on to the Chicago Mercantile Exchange of the US very soon. The development could be seen as opening up avenues for the Indian investors who, thereby, stand a chance to test the American waters.

However, all these moves would get going only after regulatory approvals from both India and the United States. It needs the administrative clearance from the top regulators for the listing and trading arrangement for these indices to come real.

Dwelling more into the possibilities of the Chicago Mercantile Exchange listings, it has been made public that the two bourses are geared up to move ahead. The two exchanges have said everything is ready, they are just waiting for the regulatory nod which is likely to come about soon. The NSE and the Chicago Mercantile Exchange would make possible cross-listing and licensing agreements when they are ready to go ahead as per plan. The two exchanges have reportedly inked a memorandum of understanding to explore more areas of potential co- operation too. These could include associating with each other on platforms related to development and distribution of financial products and services.

The Chicago Mercantile Association-NSE truck is likely to zoom ahead towards getting real, going by the granting of exclusive license for the Americas and Europe by NSE-affiliate India Index Services and Products Ltd (IISL) to the CME Group for trading of the Nifty 50. This apart, NSE would look at listing and trading of more India-linked products too.

The new developments could also mean that dollar-denominated futures contracts for Nifty would be made available for trading and listing on CME. Equally significant would be the fact that NSE would attain rights to the S&P 500 and the Dow Jones Industrial Average for listing of rupee-denominated futures contracts for trading.

Investors in India have lots to expect in this regard. The opening up of a channel for trading in the American bourses would mean added exposure that would provide them while trading in a more mature stock platform.

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