NSE to launch Brent crude oil derivatives on March 1

Mumbai, Feb 28 (IANS) In a bid to develop an efficient hedging mechanism against major spike in crude oil prices, the National Stock Exchange (NSE) on Thursday said it would launch trading of Brent crude oil derivatives on its platform starting Friday, March 1.

For the Brent crude oil derivatives, the exchange has tied up with ICIS, a global market information provider for the energy and petrochemical markets, to licence its BFOE (Brent-Forties-Oseberg-Ekofisk) market data, the NSE said in a statement.

"NSE shall launch two cash settled futures product 100 barrel Brent Crude Oil Futures and 10 barrels Brent crude oil mini futures. The trading period for both these Futures will be between Monday and Friday and the trading session would be 9 a.m to 11.30 p.m or 11.55 p.m IST (based on US daylight saving time period)," it said.

The initial margin on this contract would be minimum 4 per cent or based on "SPAN" whichever is higher. The SPAN margin is calculated by standardised portfolio analysis of risk (SPAN), a system adopted by most options and futures exchanges around the world.

"NSE is dedicated to deepen the Indian commodity markets by providing convenient and cost-effective onshore hedging products," Vikram Limaye, the MD and CEO of NSE was quoted as saying in the statement.

"India being the third-largest consumer of crude oil in the world, after the United States and China, required an efficient hedging mechanism. This product will provide an opportunity to market participants for accessing the global crude oil markets and hedging their risk."

In the commodity derivatives segment, the NSE has earlier launched futures contracts in gold and silver. The exchange also received the Securities and Exchange Board of India's approval to launch futures contracts in copper.