Indian bourses shine in derivatives

Indian bourses shine in derivatives

April 15, 2019

NSE and BSE account for 96% of currency trading in the Asia-Pacific region in 2018

Indian exchanges do not offer trading in exotic derivative instruments like their counterparts in the developed markets in the U.S. and Europe, but that has not stopped the bourses from becoming one of the largest derivative trading centres globally.

According to the latest report by the World Federation of Exchanges (WFE) and the International Options Market Association (IOMA), the National Stock Exchange (NSE) and the BSE accounted for 96% of the currency derivatives trading in the Asia-Pacific region in 2018. Further, the NSE was the global leader in terms of volume of trading of index options and eighth in single stock options in the calendar year 2018. The year also saw India’s largest bourse being ranked second in the volume of single stock futures contracts.

Incidentally, three exchanges — Korea Exchange, NSE and the Moscow Exchange — accounted for 68% of the total single stock futures total volumes traded. Further, the NSE and Korea Exchange together accounted for 90.7% of the volume of index options in the Asia-Pacific region.

According to the WFE-IOMA 2018 Derivatives Report, the NSE saw a total of 221.5 crore index options contracts being traded in 2018 with Bank Nifty options and Nifty options contracts featuring among the top traded contracts globally.

The volume of stock futures contracts was pegged at over 25 crore giving the NSE the second spot in the global ranking. More importantly, the annual growth rate in volume on the Indian exchange is also among the highest in the world.

In 2018, NSE’s volume of index options rose 63%, which was the highest among the top 10 bourses in the category. The volume of NSE’s single stock options also registered a rise of 46%, which was second only to Brazil’s 75% surge.

In the currency derivatives segment, the NSE and the BSE together account for 96% of such derivatives volume in the Asia-Pacific region. The two Indian exchanges occupy the top two ranks with nearly 211 crore contracts traded in 2018. Further, the BSE registered the second-highest volume growth in the year at 70% — second only to 84% of Singapore Exchange.

In commodities as well, an India exchange is featured among the top 10 globally. In 2018, the Multi Commodity Exchange of India (MCX) was ranked eighth globally with a little over 23 crore contracts traded while registering a 16% rise during the year. In India, MCX is the biggest commodity bourse with a market share of more than 90%.

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