The Securities and Exchange Board of India (Sebi) will soon come out with a regulatory framework for allowing Indian stock exchanges to launch derivatives based on indices abroad. Sebi will lay down the finer contours related to market capitalisation, number of stocks in the indices and their weights. According to people familiar with the matter, the regulator wants stock exchanges to introduce derivatives only in indices that have a minimum market capitalisation of $100 billion and are broad-based. In other words, Sebi plans to put in place comprehensive norms that will serve as the base for all future alliances between Indian and foreign exchanges. “The complete framework has been decided and will be announced soon,” said a person privy to the development, on condition of anonymity. “While it (overseas index) should have a minimum m-cap (market capitalisation) of $100 bn, there should be at least 10 stocks in the index. Further, most of the stocks should have substantial weights in the index.”
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