LIC all set to enter derivatives trade

“We are extremely vigilant about our investment activities after the Unit Trust of India episode. We are keen on hedging our future risks and are just waiting for the guidelines of the Insurance Regulatory and Development Authority (Irda) on derivatives trading. We would undertake the trading as the guidelines are ready,” said Mathur.

Describing LIC’s investment strategy as long-term, Mathur said the focus will be on the equity and real estate markets to maximise the Corporation’s returns. “We are making all possible arrangements to make sure that our monies are secure and to protect it from undue risks.”

On securitisation, Mathur said LIC has already entered into securitisation deals with some of the companies including a Rs 20-25 deal with Dewan Housing Corporation. “We are now introducing a rating system by which only AAA-rated companies will be offered the facility of securitisatisation deal,” he said, adding that a few big corporates had shown interest in entering into securitisation deal with the Corporation. “There were only a few securitisation deals earlier, which we would now like to expand,” he said.

Brushing aside the current lacklustre performance of the stock markets, Mathur said LIC would continue to lend stability to the stock markets. The Corporation has virtually dominated the stock markets with UTI and foreign institutional investors playing second fiddle in recent times.

“Unlike earlier times, we are now emphasising on secondary market equity trading and bond trading to secure the greater returns,” he averred. LIC, along with other players, is planning to give a boost to the secondary market bond trading. Apart from this, it would like to churn its government securities portfolio.

Analysts have reacted positively about LIC’s entry into derivatives trading in the domestic stock market. The derivatives market volume, which has remained low at the moment will get a fillip after the entry of the leader, feel market players.