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New insights into India’s single stock futures markets

Author

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  • HUNG, MAO-WEI
  • SO, LEH-CHYAN

Abstract

This study investigates correlations between India’s bustling single stock futures (SSFs) and its peculiar Badla mechanism. Data from the world’s most active SSF market, the National Stock Exchange (NSE) of India, are used. The results indicated that both the Badla mechanism and the introduction of SSFs seem to have contributed to the higher volatility of the spot markets. Our results show that the NSE’s success with SSFs can be attributed to the peculiar trading conventions of the Badla system. However, we propose that this success could come at the cost of market disability, suggesting that there is justification for strengthening market regulations.

Suggested Citation

  • Hung, Mao-Wei & So, Leh-Chyan, 2009. "New insights into India’s single stock futures markets," MPRA Paper 52491, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:52491
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    File URL: https://mpra.ub.uni-muenchen.de/52491/1/MPRA_paper_52491.pdf
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    single stock futures; Badla mechanism; National Stock Exchange (NSE) of India; volatility;

    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G13 - Financial Economics - - General Financial Markets - - - Contingent Pricing; Futures Pricing
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets

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