Introduction of Options in Commodity Derivatives Market

1. At present the only instrument available in the Commodity Derivatives market is futures on individual commodities. Introduction of new commodity derivatives products has been a subject of deliberation as it is considered to be conducive for the overall development of the commodity derivatives market, attracting broad base participation, enhancing liquidity, facilitating hedging and bringing in more depth to the commodity derivatives market.

2. In his Union Budget Speech for the year 2016-17, the Hon’ble Finance Minister announced that “new derivative products will be developed by SEBI in the Commodity Derivatives market”.

3. SEBI has constituted a committee of experts known as Commodity Derivatives Advisory Committee (CDAC) to advise SEBI on matters concerning effective regulation and development of the commodity derivatives market. The recommendations made by the CDAC inter alia, on the subject of introduction of new products have been considered and it has been decided that Commodity Derivatives Exchanges shall be permitted to introduce trading in 'options'.

4. The Commodity derivatives exchanges willing to start trading in options contracts shall take prior approval of SEBI for which detailed guidelines will be issued in due course.

5. The circular shall be effective from the date of this circular.

6. The Exchanges are advised to:

i. take steps to make necessary amendments to the relevant bye-laws, rules and regulations for the implementation of the same.

ii. bring the provisions of this circular to the notice of the members of the Exchange and also to disseminate the same on their website.

iii. communicate to SEBI, the status of the implementation of the provisions of this circular.

7. This circular is issued in exercise of powers conferred under Section 11 (1) of the Securities and Exchange Board of India Act, 1992, to protect the interests of investors in securities and to promote the development of, and to regulate the securities market. 8. This circular is available on SEBI website www.sebi.gov.in under the category “Circulars” and “Info for Commodity Derivatives”.

SEPTEMBER 27, 2016 SPOT NIFTY VIEW

SPOT NIFTY CURRENTLY TRADING AT 8750 MARKET BROKEN FROM HIGHER LEVELS SOME THINKING SELLING IS GOING ON SOME THINKING PROFIT BOOKING IS THE REASON HAHAHA DONT FIND THE REASONS IN MARKET JUST FOLLOW THE TREND AS SAID 8970 IS TOUGH TO CROSS FROM THERE 8750 ALMOST CAME.

NOW WHAT NEXT???

8680 IS THE MAIN LEVEL TO WATCH FROM HERE IF BROKEN THEN WE ARE HEDGING TOWARDS 8280 POSITION-ALLY  BUT FROM HERE SEEMS MARKET WILL REBOUND TOWARDS 8935–9035 IF BREACH BELOW 8680 THEN ONLY OPTION THAT IS SHORT NIFTY NOTHING ELSE SO MAIN LEVEL TO WATCH IS 8680 SPOT.

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BoJ opts for tweaks to QE

The Bank of Japan has opted to finesse the conditions of its quantitative easing Programme rather than unleash a large dose of stimulus in its hotly-anticipated policy meeting – although policymakers left the door open to taking interest rates further into negative territory.

Unveiling “QQE with yield curve control” the BoJ said:

Interest rates were kept on hold at minus 0.1 per cent, although further rate cuts are not ruled out.

The scale of its quantitative easing programme was also kept on hold, with overall asset purchases at ¥80tn a year. However the BoJ has scrapped the maturity target in its bond-buying programme, a move which will ease the pressure on banks as a consequence of negative interest rates. Currently, the average remaining maturity of the government bonds the BoJ buys is set at 7-12 years.

The timeframe for reaching 2 per cent inflation target, which has been repeatedly pushed back since being first announced in April 2013, has now been set as “the earliest possible time”, – likely to be longer than the target of during fiscal 2017, the most recent date range outlined.

Source - FT

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Bank of Japan September monetary policy meeting announcement

Bank of Japan September monetary policy meeting announcement

• Keeps negative rate unchanged
• To expand monetary base until inflation stable above 2%
• To modify its policy framework
• Adopts QQE with yield curve control
• To keep buying JGBs so balance of its holdings increases at annual pace of 80 trln yen
• Introduces new market ops for yield curve control
• Depending on market conditions may set JGB purchase size per auction to fixed amount or unlimited amount
• Purchasing yields will be set per auction by indicating the spread from the benchmark yield which BOJ determines separately
• Makes amendment to ETF purchases
• Decides to set target for long term interest rates
• Maintains -0.1 pct negative interest rate
• To abandon monetary base target
• Says no official base money target, but maintains annual pace of JGB buying at 80 trln yen
• To buy JGBs so 10 yr yield hovers around 0 pct
• Scraps range for duration of JGBs that BOJ buys
• Adopts commitment to let inflation overshoot above 2 pct
• BOJ can cut short term policy rate, target level of long term rates in future easing
• BOJ  may accelerate expansion of monetary base as future policy option
• BOJ  to continue expanding monetary base until CPI exceeds 2% and stays above target in stable manner
• Pace of monetary base increase may fluctuate in short run under market op that aims to control yield curve
• Ready to conduct fixed rate JGB buying ops for 10-yr, 20-yr JGBs in case interest rates spike
• To make yield curve control a centrepiece of its new policy framework
• Maintains commitment to achieve 2% inflation at earliest date possible
• Adopted new policy framework with view that further rise in inflation expectations may take time

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