A STUDY ON DERIVATIVES MARKET IN INDIA

OBJECTIVE
• To understand the concept of the Derivatives and Derivative Trading
• To know different types of Financial Derivatives.
• To know the role of derivatives trading in India.
• To analyze the performance of Derivatives Trading through open interest
data with reference to options.
• To study about Risk Management with the help of derivatives.
• To analyze the operation of futures and option.
• To find the profit/loss position of futures buyer and seller and also the
option writer and option holder.

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 SCOPE
1. In India, all attempts are being made to introduce derivative instruments in
the capital market.
2. The National Stock Exchange has been planning to introduce index-based
futures. A stiff net worth criteria of Rs.7 to 10 corers cover is proposed for
members who wish to enroll for such trading.
3. But, it has not yet received the necessary permission from the securities and
Exchange Board of India.
4. In the forex market, there are brighter chances of introducing derivatives on
a large scale. Infact, the necessary groundwork for the introduction of
derivatives in forex market was prepared by a high-level expert committee
appointed by the RBI.
5. It was headed by Mr. O.P. Sobhani.
6. Committee’s report was already submitted to the Government in 1995. As it
is, a few derivative products such as interest rate swaps, coupon swaps,
currency swaps and fixed rate agreements are available on a limited scale.
7. It is easier to introduce derivatives in forex market because most of these
products are OTC products (Over-the-counter) and they are highly flexible.
8. These are always between two parties and one among them is always a
financial intermediary.
9. However, there should be proper legislations for the effective
implementation of derivative contracts. The utility of derivatives through
Hedging can be derived, only when, there is transparency with honest
dealings.
10. The players in the derivative market should have a sound financial base for
dealing in derivative transactions.
11. What is more important for the success of derivatives is the prescription of
proper capital adequacy norms, training of financial intermediaries and the
provision of well-established indices

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PARTICIPANTS IN A DERIVATIVES

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DERIVATIVES AVAILABLE FOR

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TYPES OF DERIVATIVES

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