The National Stock Exchange on Wednesday said it will soon start trading in futures and options in the Volatility Index, which measures investor's anxiety at a given point of time.
"We are disseminating the product for the past one year. We will be able to start trading in the product in the next few months," NSE managing director and chief executive officer Ravi Narain told PTI.
Currently, only the NSE has the Volatility Index, called India VIX.
The market watchdog Sebi yesterday gave the go-ahead to the stock exchanges to introduce derivative contracts on Volatility Index. Volatility Index is a measure of the market's expectation of volatility over the near-term.
Since it would be contracted as it normal F&O, Narain said, the index would be updated on an intra-day basis.
Analysts said if the exchange starts operating Volatility Index, it would be a good tool to hedge the risk as investors can monitor the fear factor in the market.
"It is a fear gauge and it is a requirement of the time. As market is likely to remain volatile for the time being investors can hedge their risk. It would reduce the risk of loss," SMC Global vice-president Rajesh Jain said.