BSE ties up with Chicago Mercantile Exchange to adopt
specialized software for Risk Management.

The Stock Exchange, Mumbai (BSE) has entered into an agreement with Chicago Mercantile Exchange (CME) to adopt its "Standard Portfolio Analysis of Risk" (SPANŽ) system for calculating margin requirements and managing risk.

SPAN is a risk-based, portfolio-approach, simple yet powerful, efficient and accurate system for computing performance bond (margin) requirements for portfolios of futures, options, and other derivative and non-derivative instruments. First introduced by the CME in 1988, SPAN has become an industry-standard, adopted by more than 30 exchanges and clearing organizations worldwide including Tokyo Stock Exchange, Singapore Exchange and Hong Kong Futures Exchange.

"With the adoption of SPAN, BSE will take a quantum leap in the field of risk management," according to Dr. Sanjiv Mehta, CEO - Derivatives Segment, BSE. "BSE will now be equipped with the latest risk management software and will be at par with international standards of risk management. We intend to use SPAN not only for risk management of derivatives, but also for recognizing risk offsets between the cash and the derivatives markets in the future."

"We're very pleased that BSE has adopted SPAN," said Mr. Ed Gogol, Director, Clearing Systems Development at CME.
"We look forward to continued cooperation with BSE as it launches options trading."

Dr. Sanjiv Mehta
CEO
Derivatives Segment

May 17, 2001