The document discusses financial derivatives and their role in sustainable development. It analyzes the derivatives market in India, outlines the key benefits of derivatives for businesses, and describes the major types of derivatives and players in the market. The derivatives market in India has experienced explosive growth and is expected to continue growing. Financial derivatives help businesses hedge risks and take advantage of ups and downs in the market to increase profits. While it is an innovative practice, regulations and procedures could still be simplified further to realize its full potential.
The document discusses financial derivatives and their role in sustainable development. It analyzes the derivatives market in India, outlines the key benefits of derivatives for businesses, and describes the major types of derivatives and players in the market. The derivatives market in India has experienced explosive growth and is expected to continue growing. Financial derivatives help businesses hedge risks and take advantage of ups and downs in the market to increase profits. While it is an innovative practice, regulations and procedures could still be simplified further to realize its full potential.
The document discusses financial derivatives and their role in sustainable development. It analyzes the derivatives market in India, outlines the key benefits of derivatives for businesses, and describes the major types of derivatives and players in the market. The derivatives market in India has experienced explosive growth and is expected to continue growing. Financial derivatives help businesses hedge risks and take advantage of ups and downs in the market to increase profits. While it is an innovative practice, regulations and procedures could still be simplified further to realize its full potential.
PRACTICE IN DIGITAL ERA FOR SUSTAINABLE DEVELOPMENT SAI RAGINI. R PG AND RESEARCH DEPT OF COMMERCE (M.COM A/F) Objectives of the study: 1. Analyze the current scenario of derivatives market in India. 2. To know the benefits of derivatives to businesses in India. 3. To understand the types of derivatives and players in derivatives market. Data Collection: The study is exclusive based on secondary data. It is collected from various sources such as books, articles, reports etc. It is a security or contract whose value depends on another contract or asset. Financial instruments - prices or values are derived from the prices of other underlying financial instruments or financial assets. • The Bombay Cotton Trade Association started future trading. 1875
• Government banned cash settlement and option trading.
1952
• Prohibition of trading options was lifted.
1995
• Securities Contract Regulation Act 1956 of was amended and
1999 derivatives could be declared as a securities.
• Derivative trading commenced in India In Jan 2000 after SEBI
granted the final approval to this effect in May 2001 on the 2001 recommendation of L.C. Gupta Committee.
• Market introduced various techniques such as options and
2002 futures. India has registered an "explosive growth" and is expected to continue the same in the years to come.
Remarkable growth both in terms of volumes and
numbers of traded contracts.
NSE alone accounts for 99 percent of the derivatives
trading in Indian markets.
The turnover of the NSE derivatives market exceeded
the turnover of the NSE cash market. In 2008, the value of the NSE derivatives markets was Rs. 130, 90,477.75 Cr.
If we compare the trading figures of NSE and BSE,
performance of BSE is not encouraging both in terms of
volumes and numbers of contracts traded in all product
categories.
Equity futures are most popular in terms of volumes and
number of contract traded • Forwards Financial • Futures Derivatives • Options • Swaps Hedgers
Speculators
Arbitrageurs Eliminate the risk or greatly mitigate the risks involved in business
The prudent business operator will take the advantages of
ups and downs in the derivative market.
Example – ‘A’ sells the asset, if the asset is perceived to be
depreciated in the future period. It is new to Indian Financial market.
It is gaining momentum, the growth rate is rapid.
The regulations & settlement procedure should be made
simpler.
Profit can be increased and assets can be purchased that
speculate to have higher financial value in the future.
The financial derivative or money that we will earn through
that increase in value is an application of financial derivative concepts.