Actionable insights on equities, fixed-income, macros and personal finance Start 14-Days Free Trial
Actionable investing insights Get Free Trial

New Products In Derivatives


SEBI has produced a draft proposal for some new products in the derivative markets that it wants to allow. These are extremely interesting and will give people like you and me the ability to make more informed choices.

Mini Contracts: Each Index trades in a lot size which brings the contract amount to about 2 lakhs apiece. This may be too much for the common man, so the concept of “mini” contracts, or contracts that are fractions of the contract size of a full derivative. SEBI hasn’t specified the fraction but have said that minis will only be considered for Nifty and Sensex F&O. Current Nifty lot size is 50, so a mini contract may be 10 or 5, which means we will be able to reduce our exposure to 25K to 50K.

Longer tenure contracts: You can only buy futures for one, two and three months at this time. SEBI proposes to allow contracts of longer tenure, even years. I’m not sure how this will fly because even the current contracts are illiquid, but I must say that such products should be allowed – if you don’t allow them, how will they ever show liquidity? Plus, this is a huge income opportunity for people who want to do long term covered calls or arbitrage.

VIX, Currency futures and a Bond Index: The idea of creating indices that are available abroad, and that allow people to get into new products.

Options on futures: SEBI wants to introduce options on things like interest rates, energy etc. where the underlying is a future rather than a stock. Very interesting. I will be able to talk more about this once more details are in place.

Strategies: Extremely interesting idea here. The idea is to create an index that tracks a “strategy” instead of a stock. Something we really like at Moneyoga. I like the examples SEBI has mentioned and will look forward to seeing more details – especially that you can use futures and options on such strategies. Watch this space.


Like our content? Join Capitalmind Premium.

  • Equity, fixed income, macro and personal finance research
  • Model equity and fixed-income portfolios
  • Exclusive apps, tutorials, and member community
Subscribe Now Or start with a free-trial