Published On: Wed, Apr 13th, 2011

FIA Asia India Conference Highlights

FIA Asia IndiaFIA Asia held its one-day India conference last week (April 7) in Mumbai which saw a packed ballroom at the Taj Lands End. The National Stock Exchange of India (NSE), as host exchange for the event, put on a very good conference with around 200 people in attendance. The welcoming address was given by Ravi Narain, Managing Director and CEO of the NSE. He highlighted how rapidly the futures industry has evolved in India particularly index options and single stock futures of which the NSE is the leading player.

The keynote Address was bestowed by Dr. Thomas Mathew the Joint Secretary of the Department of Economic Affairs of the Ministry of Finance of India. Besides covering the economic achievements of India he told us an interesting anecdote on the first option contract as found in the bible. Jacob entered into a call option with a premium of 7 years hard labor for the hand of Rachel. At the end of the seven years the father, Laban, who wrote the option, reneged on the contract and in affect was the first failed options delivery as well.

The first panel of the day was “Indian Markets and Products: What’s New, What’s Next?”. Panelists included Phil Joslin, for Eurex and Janice Kan, Senior Vice President for Singapore Exchange with representatives from the BSE, Sayee Srinivasan, Head, Product Strategy and the NSE, R. Sundararaman, Senior Vice President. It was a good panel on the different points of view from the local exchanges and the foreign exchanges seeking access into India. Eurex has recently listed SENSEX futures and SGX has recently listed STOXX futures too.

The second panel, Indian Markets: Global Perspectives was populated with FCMs. One of the local brokers wasn’t clear on the term “FCM” as they are referred to as “brokers” or “members” in India. There was a marked difference on how the foreign FCMs perceived doing business in India and what the local brokers thought. While the ideas from the West may be valid no one likes being told how to run their business.

After lunch a panel on “Commodity Markets in India, the Region and the World” was next. India with several commodity exchanges is on its way to being a global commodity trading destination like it once was in the times of the Romans. The two largest commodity exchanges are the Multi Commodity Exchange (MCX) owned by Financial Technologies and the National Commodity and Derivatives Exchange (NCDEX) whose matching engine was built by Tata Consultancy Services.

Paul Hilgers, Director of Optiver, moderated the final panel of the day titled “High-Frequency and Algorithmic Trading, Direct Access, Co-location and Technology” While it was clear that there is a thirst for this kind of trading in India it was also clear that the understanding of these concepts was not fully grasped by all the panelists. It’s only a matter of time, however. During the Q&A session a question was raised about smart order routing and darkpools. These are generally attributed to equities trading and not futures particularly in Asia and probably should have been addressed but are hot topics in India nonetheless. Mr. Hilgers view of dark pools was that the lack of transparency in these alternatives made them a detriment to the industry. For a long only fund manager who is trying to trade 20 days ADV where else can she go when average order sizes are shrinking around the world?

The evening ended with a buffet dinner outdoors at the pool level of the Taj. As part of the entertainment a troupe of local dancers showed us the different styles and costumes of the various regions of India such as the flowers of Kashmir and the drummers of Punjab to name a few. The show was very vibrant and full of energy which underlies the richness and diversity of India and subsequently its futures trading industry.

Despite the conference only being one day much ground was covered, ample networking opportunities were available and many new ideas were discussed. Looking forward to next year at FIA Asia India.

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