Alarmed by huge outstanding positions on the derivative markets, the Securities and Exchange Board of India (Sebi) and the National Stock Exchange (NSE) have embarked on an investor education programme warning them about the risks associated with their positions and margins call on them.Sebi officials say many small investors are jumping onto the derivative bandwagon without understanding the high risks associated with it. Foreign institutional investors (FIIs) are the big players in the derivative segment and small investors should get into the market only after understanding the high risks, an NSE official said.FIIs have built up outstanding positions on the derivative market which peaked to Rs 3,500 crore till last week.In fact, in order to reduce volatility the NSE has already imposed stiff exposure margins which go as high a 30 per cent on some counters. The impact of the margins not only wiped off 140 points from the bellwether 30-share Sensex of the BSE last week, but also led to open positions on NSE’s derivatives segment dwindling to Rs 8,896 crore, compared to about Rs 12,000 crore a few days ago.The slapping of gross exposure margins has narrowed the difference between the stock price in the futures market and the underlying cash market price substantially. The average premium between the two markets has come down to 2-3 per cent as compared to 12-15 per cent a few days ago. However the total average margin on select brokers has jumped up to 70 per cent as against about 40 per cent few days back.
