Nation Stock Exchange (NSE) has expanded its product offering, it has introduced options contracts on underlying WTI crude, oil, and natural gas futures in the commodity derivatives market.
The exchange launched November, December, and January contracts for WTI crude and November and December contracts for Natural Gas on the 9th of October. The launch was pre-poned from the scheduled date of October 16.
Sriram Krishnan, Chief Business Development Officer at NSE, expressed his enthusiasm for this expansion, stating, "This space is very interesting, particularly given the geopolitical movements or developments we've seen over the weekend, for example.
We are very proud and happy about the fact that we are the only exchange in India that offers options and futures contracts on Brent crude, WTI crude, as well as natural gas. So I think this is a very important development for the market, and we are happy to contribute to the ecosystem."
Krishnan further emphasised the importance of diversifying the market, saying, "I think the commodities market is a very big market and will become bigger in times to come. A big country like India certainly deserves to have a couple of exchanges in every asset class, and therefore, this is a perfectly correct development from a market standpoint."
One of the key advantages of NSE's expanded product offering is the potential for arbitrage opportunities between different exchanges. Additionally, the NSE's reputation for efficiency, especially in accommodating foreign investors, has led to anticipation among traders and investors who have previously traded equity derivatives on the platform.
Krishnan explained, "Many of them have given us feedback in the past that it might be very efficient for them to use their capital if energy contracts, for example, are also available on NSE. So I think there are more reasons than one for us to be happy about this whole development."
Regarding participation and acceptance on the platform, Krishnan noted, "About 185 members who are already trading on the NSE platform for commodities for over the last three months, given that we launched futures contracts in WTI crude and natural gas, but three months back, so that's a positive for us.
Of course, the overall number of members is about 300 plus, and therefore, we think that going live with options will encourage the other participants to also come on to the NSE platform in the next few weeks."
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