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The Centre may explore the option of exchange-traded funds (ETF) to meet its divestment target for Central Public Sector Enterprises (CPSEs). An ETF is an underlying asset that tracks an index, but trades like a stock on an exchange.
According to Ravi Varanasi, Chief Business Development Officer, NSE, discussions are on and details about the Centre opting for ETFs are not yet known.
ETFs, he said, have an advantage over offer for sale (OFS) in terms of volatility management. OFS is another option that is there for the Centre. The last time the Central Government opted for an ETF was in March 2014 and it raised ₹3,000 crore.
New index possibility “It is not yet known if the government will use the same existing CPSE index from which it raised ₹3,000 crore last fiscal or a new index will be formed with new composition of PSUs stocks,” Varanasi told reporters. Details are likely to be finalised during March, he added.
Cross-currency derivatives Meanwhile, the bourse has sought permission from both the RBI and market regulator SEBI for trading in cross-currency derivatives (dollar-euro). Currently, four currency derivates are being traded — dollar, euro, yen and pound sterling — against the rupee.
“The dollar-euro is in great demand. And, we have sought regulatory approvals,” he added.
It is also looking to add new bond futures with tenures of five and 15 years. At present, it has only 10-year bond futures.
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