RISK MANAGEMENT

ECONOMIC IMPACT OF DERIVATIVE

MARKET
ECONOMIC IMPACT OF DERIVATIVE MARKET

• The derivatives market offers an effective

mechanism that facilitates the sharing of price
risks for commodities traded on the market,
helping producers deal with price volatility.
• it serves as a key role in smooth hedging and
risk management by enhancing capital inflows
in emerging and developing countries
• it has a negative impact on financial systems
by introducing more unpredictable crisis
dynamics and is a driver of contagion.
• it is widely accepted that the derivatives
market functions as a channel of risk
reduction and redistribution, a means of price
discovery and a price stabilizer.
Real GDP and real GDP per capita in India:

year Real GDP ($ Billion) Real GDP per Capita

($)

1998 710 699

2007 1333 1130

2016 2466 1862

• The derivatives market has been successful
because not only has it attracted many types
of agents from hedgers and speculators to
arbitrageurs, but it has also brought a great
deal of liquidity.