National Stock Exchange of India (NSE) on December 10 announced it had received SEBI's approval to begin derivatives on the Nifty Financial Services Index.
NSE will thrust the index derivatives on the Nifty Financial Services Index from January 11, 2021.
The exchange will allow futures and options in 7 serial weekly, excluding the monthly expiry and 3 serial monthly obligations, NSE said.
"This is the first time that the Exchange will make possible weekly futures for the stock index derivatives. The derivatives are cash-settled with the expiry date being the last Thursday of the expiry month for the regular contracts and the Thursday of the expiring week for weekly expiry contracts," NSE said.
The option agreements are European styled Call Option (CE) and Put Option (PE) with strike scheme of 30-1-30 and strike interim of 100, said the exchange.
The financial services sector assumes importance as the sector accounts for 33.5 percent of the Nifty500 index.
The Nifty Financial Services index contains 20 stocks and is designed to reflect the behavior and performance of the Indian financial market which includes banks, financial institutions, housing finance, security companies, and other financial services companies, the statement additionally said.
NSE underscored that new investment data of Foreign Portfolio Investors (FPIs) shows 48 percent of new investment flows were into the financial services sector.
The sector is estimated for 35 percent of the assets under the custody of FPIs. Many of the asset administration companies have mutual fund schemes in the financial sector theme.
The Nifty Financial Services index has a 94 percent similarity and a beta value of 1.2 with the Nifty50 index. It has a relationship of 98 percent with the Nifty Bank index.