write a note on evolution of derivatives at global and indian level.
Answers
evolution of derivatives at global and indian level:
Capital market is one of the driving forces of an economy and at present derivative market is the most active part of Indian capital market. Trading volume of equity derivatives is, on an average, more than a half time than that of trading volume of the cash equity market. National Stock Exchange (NSE) has undertaken enormous efforts in upgrading the Indian Capital, and within a short span of time it has succeeded, to a far extent, in achieving it. The Derivatives Market has shown a tremendous growth in the recent years and has become multi-trillion dollar market. Marked with the ability to partially and fully transfer the risk by locking in assets prices, derivatives are gaining popularity among the investors. Since the economic reforms of 1991, maximum efforts have been made to boost the investors' confidence by making the trading process more users' friendly and rigorous efforts have been made to reinforce the investor assurance. Financial markets are very inventive in augmenting the popularity of derivatives instruments which exemplifies how resourcefully markets are capable to package and manage risk. At the present in world markets for trade and business have become further incorporated, derivatives have strengthened these significant linkages between global markets, increasing market liquidity and effectiveness. In India, the emergence and growth of derivatives market is relatively a recent phenomenon. Hence, the present paper is an attempt to study the evolution of Indian derivative market and future prospects of various derivative segments. An attempt has also been made to review its present scenario vis a via global derivative market and develop an understanding of the bottlenecks involved in its popularity. These issues need to be resolved to enhance the investors' confidence in the Indian derivative market. The present paper is descriptive in nature and based on the secondary data.