BSE Introduces New All Stock Futures Benchmark and Plans Long‑Short Indices for Alternative Strategies

BSE, India’s oldest stock exchange, has introduced a new benchmark designed to better align with the needs of specialised investment funds and alternative strategy managers. The exchange has rolled out the BSE 500 All Stock Futures Index as part of its effort to improve benchmarking tools for derivatives‑led and long‑short strategies.

The initiative follows extensive feedback from market participants who highlighted limitations in comparing alternative portfolios against traditional long‑only indices. BSE is now preparing additional long‑short indices aimed at offering more accurate reference points for evolving investment frameworks.

Launch Of the BSE 500 All Stock Futures Index

BSE has officially launched the BSE 500 All Stock Futures Index, a benchmark designed to represent futures‑based exposure across a broad universe of Indian equities. The index currently includes more than 200 stocks that qualify based on futures availability.

BSE noted that the benchmark is dynamic in nature, allowing it to adapt as market depth and derivative coverage evolve. The index is expected to appeal to funds that run futures‑driven or derivatives‑dependent strategies requiring broader and more flexible benchmarking tools.

Development Of New Long‑Short Indices

The exchange is also working on multiple long‑short combinations to expand benchmarking options for alternative funds. Two upcoming indices include BSE 500 Long and BSE 200 Short, as well as BSE 500 Long and BSE 150 Midcap Short.

These indices aim to better represent long‑short, spread‑based, and market‑neutral strategies that cannot be accurately measured against traditional benchmarks. BSE stated that growing market participation from funds using these structures has made specialised indices increasingly relevant.

Rationale For the New Benchmarking Framework

According to BSE, fund managers have been running long‑short, absolute‑return, and market‑neutral strategies but continue to be benchmarked against long‑only market indices. This mismatch has created challenges in evaluating performance using meaningful comparisons.

The exchange highlighted that the new indices are being created in response to direct market feedback and industry requirements. The objective is to align benchmark construction more closely with how modern alternative strategies operate in India’s markets.

Industry Reaction and Fund Manager Feedback

Market participants have welcomed BSE’s latest initiative and emphasised its importance for the alternative investment space. Fund managers noted that despite being registered with SEBI under alternative frameworks, many are still required to benchmark their performance against conventional indices.

They stated that this creates a disconnect for investors who rely heavily on benchmarks to interpret performance. The introduction of long‑short and futures‑based indices is expected to offer more relevant and strategy‑aligned benchmarks for evaluating risk‑adjusted returns.

Read More: Sensex Open Interest Rises 4X After Expiry Day Change as Weekly Options Lead Trading.

Conclusion

BSE’s launch of the BSE 500 All Stock Futures Index and its plans to introduce additional long‑short indices mark a significant step in modernising India’s benchmarking landscape. These developments aim to support specialised investment funds, increase benchmarking accuracy.

They reflect the growing sophistication of alternative strategies in domestic markets. As the new indices are rolled out, fund managers and investors are expected to gain access to reference tools better aligned with contemporary portfolio construction.

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