India’s MCX Stock Exchange (MCX-SX) will introduce trading in futures and options on its flagship index SX40 from May 15, 2013. SX40 is a free float-based index of 40 large cap and liquid stocks, representing diverse sectors of the economy. The index was launched by Hon’ble Union Finance Minister Shri. P Chidambaram in Mumbai on February 9, 2013.
Index Futures and Options on SX40 will be available for trading from 9:15 am to 3:30 pm from Monday to Friday. Index Futures on SX40 will have a tick size of Rs 0.05 and will be offered in a contract trading cycle of minimum of three contracts of maturity of one-month, two-month and three-month, which would be introduced simultaneously. Index Options on SX40 will also have a tick size of Rs 0.05 and a monthly trading cycle of 3 serial monthly expiry contracts.
MCX-SX is the first and only exchange in India to have adopted the Industry Classification Benchmark (ICB), the global company classification standard of the FTSE Group, and also collaborated with Indian Statistical Institute (ISI) – India’s premier statistical research institute —and FTKMC for creating SX40 and other index product offerings that would be launched in the future. SX40 uses a capping methodology, which is used for capping exposure of a specific sector and industry classification of scrips included in the index. This cap is set at 20%, reduces the industry bias and ensures better industry representation of the underlying market.
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Some MCX-SX key facts:
- SX40, a free float-based index of 40 large cap and liquid stocks, has been designed to measure the economic performance of market representing all industries of our Economy
- MCX-SX is the first and only exchange in India to have adopted FTSE’s Industry Classification Benchmark (ICB), a global benchmarking in industry classification for its index design and data dissemination purposes.
- SX40 has offered higher returns and risk adjusted returns in the past 3 years, as compared to other benchmark indices in the Indian market
Speaking about the development, Mr. Joseph Massey, MD & CEO, MCX-SX said: “SX40 is the ‘true barometer of the Indian economy’ as it accurately represents its growth potential and dynamism, enabling domestic and global investors to partake in India’s growth story. Further, adoption of ICB in its product development efforts will take Indian markets closer to global investors and introduce global best practices in the domestic market.
This index is well suited to retail investors, institutional investors, fund houses and global investors.” Rohtas Handa, Managing Director, India & Global Relationship Management, FTSE Group said: “I congratulate MCX-SX for commencing live trading in the SX40 index. We are pleased that MCX-SX has integrated ICB into its flagship index offering and listings as their chosen classification system, which we believe will serve as an effective tool for the exchange by strengthening its transparency. The globally recognised ICB standard offers increased clarity, better structure and universality to meet the investors’ needs and enables accurate and relevant sector classification and monitoring of the market.”
ICB is used by world’s leading stock exchanges, representing over 65% of the world’s market capitalization, including NASDAQ, Borsa Italiana, London Stock Exchange, Athens Exchange, Singapore Stock Exchange, Taiwan Stock Exchange, and Johannesburg Stock Exchange. The ICB database comprehensively covers 70,000 companies and 75,000 securities worldwide, enabling the comparison of companies across four levels of classification and national boundaries.