Introduction of future contracts on Corporate Bond Indices
Summary
SEBI permits stock exchanges to introduce future contracts on corporate bond indices rated AA+ and above to enhance market liquidity. Stock exchanges must submit detailed proposals for SEBI approval before launching these derivative products. The circular outlines specific product design, risk management, and settlement frameworks in Annexure A.
Text
Stock Exchanges are permitted to launch future contracts on corporate bond indices rated AA+ and above.
Stock exchanges desirous of introducing such contracts shall submit a detailed proposal to SEBI for approval.
Stock Exchanges and Clearing Corporations are advised to take necessary steps, amend bye-laws, and disseminate provisions.
The index shall be composed of corporate debt securities with adequate liquidity, diversification, and specific weight limits per issuer and sector.
The value of the CBIF contracts shall not be less than INR 2 lakhs at the time of introduction.
Trading hours shall be between 9:00 AM and 5:00 PM, aligned with the underlying market trading hours.
Stock exchanges may introduce contracts of up to a tenure of 3 years with specified weekly, monthly, or quarterly cycles.
The expiry or last trading day for the contract shall be the last Thursday of the expiry cycle.
The daily settlement price shall be the last half an hour volume weighted average price of the contract.
Final settlement price shall be the closing price of the underlying index on the expiry day or last trading day.
The contracts would be settled in cash in Indian Rupee (INR).
Gross open positions for Category I entities shall not exceed 10% of total open interest or INR 1,200 crore, whichever is higher.
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Source: SecMarx — Introduction of future contracts on Corporate Bond Indices. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.