Stock Market

NSE turns world’s largest exchange in derivatives trading

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MUMBAI: The National Stock Exchange of India (NSE) has become the world’s largest exchange by trading volumes, outpacing US-based CME group, the world’s largest derivatives market place, Futures Industry Association (FIA) data show. “India's NSE passed CME as the world's largest exchange by trading volume,” FIA said in a report. NSE notched up 6 billion contracts traded volume in 2019, up 58% from a year ago, surpassing CME Group to become the world’s largest exchange.

CME's 2019 volume in 2019 was 4.83 billion contracts, roughly the same as the prior year. A derivatives (futures or options) contract facilitates the sale or purchase of an underlying asset at a fixed price for delivery on a future date.

In India derivatives offered are of European nature.

This means, they can be exercised only upon maturities unlike American type contracts which can be exercised anytime during the contract tenor.

Almost all contracts are cash settled here. “Participation from entire spectrum of informed investors helped us to achieve this milestone,” Vikram Limaye, MD - CEO, NSE told ET. “Indian capital markets have potential to scale further heights.

A supportive regulatory framework coupled with robust risk management also aided this move," he said. NSE offers liquid segment for index futures (Nifty and Bank Nifty), Stock futures, index options and stock options.

It also offers commodity, currency and bond derivatives. In the fiscal year to date, the total derivatives turnover was around Rs 2700 trillion up from Rs 2400 trillion in FY19. “It is important to focus more on market developments to back India’s growth opportunities,” Limaye said. Participants on NSE’s derivative platform include foreign portfolio investors, domestic institutional investors like mutual funds and insurance companies, wealthy investors and proprietary traders. Globally trading activity in the global exchange-traded derivatives markets rose by 13.7% last calendar year to reach a record of 34.47 billion contracts. FIA is the leading global trade organization for the futures, options and centrally cleared derivatives markets, with offices in Brussels, London, Singapore and Washington.

FIA was founded in 1955 in New York as the Association of Commodity Exchange Firms. Futures volume rose 12% to 19.24 billion contracts, while options volume rose 16% to 15.23 billion contracts.




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