SAFE plans index to represent South Asia

May roll out derivatives contracts, exchange-traded funds

The South Asian Federation of Exchanges (SAFE) will soon be launching an index, representing the indices of the stock exchanges in the region. The index will enable investors to take a call on the markets in the region.

SAFE is a federation of 13 stock exchanges from India, Pakistan, Bangladesh, Bhutan, Maldives, Mauritius, Nepal and Sri Lanka, with the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) being the bigger member- exchanges.

“The proposed index will be launched very soon and it will represent the Asian sub-continent,” India’s Business Standard quoted SAFE Chairman and BSE CEO Rajnikant Patel as saying.

He added that the index would be a benchmark to gauge the market sentiment in the region and, depending on the response, products based on the index would be launched in the future.

The SAFE is considering rolling out derivatives contracts and exchange-traded funds based on the index.

Mutual funds, launching offshore schemes, where a part of the corpus is invested overseas, can also float funds based on the index.

“Such an index could become a benchmark indicator for markets of the region and products based on it could become popular among FIIs,” said Deena Mehta, the managing director of Asit C Mehta Intermediaries.

Though several booming economies of the region such as Hong Kong and Taiwan are not members of the federation, the index is the first of its kind and will be watched with keen interest. Global majors such as Morgan Stanley and S&P have exclusive indices for emerging markets.

The SAFE index, however, is set to be the index of indices.
Sources said a Dow-Jones group company had designed the index.