The need of trading in a basket of scrips (forming part of a popular index like BSE Sensex) was felt by the investors who wish to link risk exposure of their portfolio only to the extent of the Sensex movements.

With a view to provide investors with this facility of creating Sensex linked portfolios and also to create a linkage of market prices of the underlying securities of Sensex in the Cash Segment and futures on Sensex, the Exchange has launched Basket Trading on BSE On- line Trading (BOLT) System w.e.f. Monday, the 14^th August 2000.

In Basket Trading System, the investors would be able to buy/ sell all 30 scrips of Sensex in the proportion of current weights in the Sensex, in one go. The investors need not calculate the quantity of Sensex scrips to be bought or sold for creating Sensex linked portfolios and this function would be performed by the system.

Moreover, through Basket Trading System, the arbitrageurs would be able to take advantage of price differences in the underlying securities of Sensex and futures on the Sensex by simultaneous buying and selling of baskets, covering the Sensex scrips and Sensex Futures. This would have the balancing impact on the prices in both cash and futures markets.

The Basket Trading System would, thus meet the needs of investors and provide new business opportunities to the investors and market participants. This would also boost the volumes and depth in cash and futures markets.

A.N. Joshi
Executive Director

10^th August, 2000.