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Emerging Trends of Derivative Trading In India

Author

Listed:
  • Rajkumar
  • Priyanka Sharma

Abstract

Derivatives markets generally are an integral part of capital markets in developed as well as in emerging market economies. These instruments assist business growth by disseminating effective price signals concerning exchange rates, indices and reference rates or other assets and thereby render both cash and derivatives markets more efficient. These instruments also offer protection from possible adverse market movements and can be used to manage or offset exposures by hedging or shifting risks particularly during periods of volatility thereby reducing costs. By allowing for the transfer of unwanted risk, derivatives can promote more efficient allocation of capital across the economy, increasing productivity in the economy. Though the commodity features trading has been in existence since 1953 and certain OTC derivatives such as Forward Rate Agreements (FRAs) and Interest Rate Swaps (IRSs) were allowed by RBI through its guidelines in 1999, the trading in "securities" based derivatives on stock exchanges was permitted only in June 2000. The discussion that follows is mainly focused on "securities" based derivatives on stock exchanges.

Suggested Citation

  • Rajkumar & Priyanka Sharma, 2008. "Emerging Trends of Derivative Trading In India," Journal of Global Economy, Research Centre for Social Sciences,Mumbai, India, vol. 4(2), pages 199-218, June.
  • Handle: RePEc:jge:journl:427
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    References listed on IDEAS

    as
    1. Rena, Ravinder, 2007. "Sectoral Performance In The African Economy – Some Issues And Trends," MPRA Paper 11089, University Library of Munich, Germany, revised 2007.
    2. Niimi, Yoko & Ozden, Caglar, 2006. "Migration and remittances : causes and linkages," Policy Research Working Paper Series 4087, The World Bank.
    3. World Bank, 2007. "World Development Indicators 2007," World Bank Publications, The World Bank, number 8150.
    4. RavinderRena, 2008. "Sectoral Performance in the African Economy – Some Issues and Trends," Indus Journal of Management & Social Science (IJMSS), Department of Business Administration, vol. 2(1), pages 1-14, June.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Indian Economy; financial market; derivatives;

    JEL classification:

    • G1 - Financial Economics - - General Financial Markets
    • G2 - Financial Economics - - Financial Institutions and Services
    • G3 - Financial Economics - - Corporate Finance and Governance

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