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SEBI allows mini contracts for Sensex, Nifty derivatives

Securities and Exchange Board of India (SEBI) has announced that it would allow mini contracts for derivatives based on Sensex and Nifty

Securities and Exchange Board of India (SEBI) today announced that it would allow introduction of new derivatives with a contract size of Rs. 1 Lakh. To start with, these derivatives would be based on Sensex and Nifty.

It should be noted that the minimum contract size of regular index and stock based derivatives is Rs. 2 Lakhs.


BSE Announcement

Following SEBI’s announcement, The Stock Exchange, Mumbai (BSE) has planned introduction of mini contracts on Sensex starting January 1st, 2008. These would have a market lot of 5 units, and would have the symbol “MSX”.

These contracts would be available with a maturity of 1, 2 and 3 months, along with weekly options.


What does it mean for you?

The lower minimum contract size means that smaller investors would be able to hedge their portfolio using these contracts with a lower capital outlay. This would mean a better hedge for your portfolio, and would also result in more liquidity in the market.

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