The Securities and Exchange Board of India has expressed concern over the huge outstanding position in the futures and options segment and is learnt to have asked the National Stock Exchange for details.
This assumes significance in light of the fact that two weeks ago, the finance ministry called the two major exchanges, the Bombay Stock Exchange and the NSE, and Sebi for a meeting to discuss the issue.
Sources close to the development said the ministry was worried that the huge open position could lead to a cascade effect on the cash market.
Sebi sources said the regulator was keeping tabs on the build-up of open interest in the futures and options segment, especially in view of the rising trade volume in the cash market.
The position in the derivatives segment was discussed at a recent meeting of Sebi's Secondary Market Advisory Committee, which felt closer scrutiny of trading patterns was needed.
Details of stocks, clients and positions are being obtained from the exchanges. Trading patterns of foreign institutional investors in the derivatives segment would also be monitored, sources said.
The aggregate open position in the derivatives segment on the NSE touched Rs 13,000 crore (Rs 130 billion), almost three times the volume in the cash market, on Thursday, while the total turnover reached an all-time high of Rs 18,000 crore (Rs 180 billion) last week.
In recent data released by Sebi, proprietary trading by brokers in the derivatives segment amounts to more than 47 per cent of the total trading volume in the market. Trading on clients' behalf, however, still forms the bulk of the trades, at 51.4 per cent.
On the NSE's derivative segment, 103 members contributed over Rs 1,000 crore (Rs 10 billion) to the turnover in November 2003 while 80 members contributed between Rs 500-Rs 1000 crore (Rs 5-Rs10 billion).
Of course, in the last six months, the number of members contributing over Rs 1,000 crore to the turnover has been climbing.