BRICS bourses start cross-listing of derivative indices

Aiming to expand their product offerings beyond home markets, five of the world's leading emerging market indices, have started to cross-list derivative indices from Friday.

Accordingly, Brazil's IBOVESPA futures; Russia's MICEX Index futures; Hong Kong's Hang Seng Index futures; and South Africa's FTSE/JSE Top40 futures got listed on the BSE.

Price bands for the benchmark equity index derivatives will be same as that applicable for the existing stock index futures contracts, BSE said.

It added that the derivatives contracts on these foreign stock indices shall also be denominated, traded and settled in Indian rupees.

BSE further noted that exchange transaction charges for trades done by trading members on these futures contracts shall be waived off for a period of 6 months from commencement (till September 30, 2012).

The cross-listing of benchmark equity index derivatives is likely to facilitate liquidity growth in the BRICS markets and will considerably strengthen their international position.

The founding members of the BRICS Exchanges Alliance include BM&FBOVESPA from Brazil, Open Joint Stock Company MICEX-RTS from Russia, BSE Ltd from India, Hong Kong Exchanges and Clearing Ltd (HKEx) as the initial China representative, and JSE Ltd from South Africa.

The alliance was formed on October 12, 2011, at a World Federation of Exchanges' conference in Johannesburg, South Africa.

The listing of benchmark equity index derivatives marks the implementation of the first phase of the alliance.

Under the second phase, the member exchanges plan to work together to develop new equity index related products representing the BRICS economies and cash market product offerings. The third phase may include product development and cooperation in additional asset classes and services.