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OTC derivatives market in India: recent regulatory initiatives and open issues for market stability and development

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  • Dayanand Arora
  • Francis Xavier Rathinam

Abstract

In the wake of the present financial crisis, which is believed to have been exacerbated by over-the-counter derivatives, increasing attention is being paid to analysing the regulatory environment of these markets. In this context, we analyse the regulatory framework of the over-the-counter derivatives market in India. The paper, inter alia , analyses how a good reporting system and a post-trade clearing and settlement system, through a centralized counter party, has ensured good surveillance of the systemic risks in the Indian over-the-counter market. This research paper also explores those open issues that are important to ensure market stability and development competition among centralized counterparties and better supervision of the off-balance sheet business of financial institutions.

Suggested Citation

  • Dayanand Arora & Francis Xavier Rathinam, 2011. "OTC derivatives market in India: recent regulatory initiatives and open issues for market stability and development," Macroeconomics and Finance in Emerging Market Economies, Taylor & Francis Journals, vol. 4(2), pages 235-261, April.
    • Handle: RePEc:taf:macfem:v:4:y:2011:i:2:p:235-261
    DOI: 10.1080/17520843.2011.580571
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    1. Goderis, B.V.G. & Marsh, I. & Vall Castello, J. & Wagner, W.B., 2006. "Bank Behavior with Access to Credit Risk Transfer Markets," Other publications TiSEM 75d3b9f4-be84-499d-b1a3-8, Tilburg University, School of Economics and Management.
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    6. Stephen G Cecchetti & Jacob Gyntelberg & Marc Hollanders, 2009. "Central counterparties for over-the-counter derivatives," BIS Quarterly Review, Bank for International Settlements, September.
    7. Shah, Ajay & Thomas, Susan & Gorham, Michael, 2008. "Indian Financial Markets," Elsevier Monographs, Elsevier, edition 1, number 9780123742513.
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    Cited by:

    1. Parthasarathi Shome, 2011. "Financial Transactions Taxes," Working Papers id:3930, eSocialSciences.
    2. repec:ind:icrier:254 is not listed on IDEAS
    3. Shruthi B. C. & N. Suresh, 2022. "Indian Derivatives Market Evolution and Challenge," Papers 2207.13123, arXiv.org.
    4. Silva, Walmir & Kimura, Herbert & Sobreiro, Vinicius Amorim, 2017. "An analysis of the literature on systemic financial risk: A survey," Journal of Financial Stability, Elsevier, vol. 28(C), pages 91-114.

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    JEL classification:

    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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