c

c



 c

Ê




 
Ê Ê



 

 
 I
I
I

I cc
?
  

    


     

 


  

   


   


 



INDIAN
FINANCIAL
SYSTEM

FINANCIAL
FINANCIAL FINANCIAL FINANCIAL
INSTITUTIONS
SERVICES MARKETS INSTRUMENTS
 I

I  c

Vm  

  



  

 







 




V  

 


 


 
 


 


Vm   

  

  


  

I
I

I  c
FINANCIAL MARKET

CAPITAL MARKET MONEY MARKET

EQUITY MARKET DEBT MARKET

PRIMARY MARKET

SECONDARY MARKET

DERIVATIVES MARKET
 IV IVc


  






 

 
 


  


 

 
  




Financial
Marketplace

Derivatives Fundamentals
ͻFutures ͻStocks
ͻForwards ͻBonds
ͻOptions
ͻSwaps
 Ê
?
 m?

ͻ It is an agreement between two

parties that call for the delivery of an
Forwards asset on a specified future date at a
price i.e. negotiated at the time of
entering into contract.

ͻ It is a contract that call for the

delivery of an asset on a specified
Futures future date at a price i.e. fixed at the
outside.
 ͻ It is a contract which gives the right to the
buyer to transact on/before a future date
Options at a price i.e. fixed at the outset. It
imposes an obligation on the seller.

ͻ It is a contractual agreement
between two parties to exchange
Swaps specified cash flows at
predetermined points in time.
 
 

 c
m    

  




   
  

 


 

  

  

c
  

1. They are bilateral Contracts and hence exposed to counter party
risk.
2. Each contract is custom designed, and hence is unique in terms of
contract size, expiration date and the asset type and quality.
3. The contract price is generally not available in public domain
4. On the expiration date, the contract has to be settled by delivery of
the asset.
5. If the party wishes to reverse the contract, it has to compulsorily go
to the same counter-party, which often results in high prices being
charged.
 
    
  

¬
Through equity forward, the
Currency forward contracts value of transactions that will
are widely used by companies occur in the future was set at
to manage foreign exchange this time, so as to overcome
risks. the risk

c
!  

  
Bond forward almost similar
Commodity forward is a to the equity forward, except
contract with the underlying that the bonds have a
asset in the form of maturity date, so that forward
commodities such as oil, contracts must expiration
metal, corn, and others. before the due date.
 II I

c

ñ COUNTER PARTY RISK

ñILLIQUIDITY

ñLACK OF CENTRALISATION OF TRADING

 

 c


  

 




 


 





    

 m 

 

  












   
  


 








 


 
 !

   





 

 


 "
 
 




c
`


   

` 


 


` m
 
  

` 


 

# 
 

$
`  

  

   
 ?
?

‘

  ‘ 

 


 ‘


 ‘
‘  ‘


 
  

 


 


 II I

c

§ 
 %



   

§ &

 


  



 


 

§ '
 

  

 
  









c
c 



 
 



c

  







  



 
c 

 
  

 


 




 







 


 
 

 Y

 
  Y


 
 


"







 "

 
c



  
 


 














 







  











 
 


 
 














 ( 


  )


 




  *



 +





 

 
 
?




 
 (











 
 







 
 "








 





 
 "


*





  


 &







   


 

!







 


# $?

*

















, 


 

 

 




 




 
 




 





c
 c
?



 


 


-

. (
 

 

/ (
 


 

 


0 
 "





  



1 






   



2 

  





c


 c

 m ?

mm 
m*m+ *?

Ê
?
)

m*m+ *?
SCOPE
(+*+

Ê)m?
N



?3
m ?
 
 
V 


 





 

 





 



V ?


    








 



   








 


!

V 



 
 



 



 
 













V 









 







 


? 
#





$



  


 Ic




’ ?

 
 

  
 


 4  
 


  


 



’ 
 

 4 



 

’ 
 

 
 



 
  


 ?




 




 

I




V 


 

 
  


  



 (

  


 
 


  
 



  


 

 



V 

 Ê
   

 

 



 
 


 




V

  






   
 
 



 
 


 
 

 


 

 ÃI


’ 


 




 
 





 



’ (

 


  



 







  

  


 




’ 


 

  


  

 


 c  I

’ 


 


 
 
 4 %


 
 


’ 

 


 #


   
$ 4 


 
  

   


’ 

   






  



?
 





 



   


   








  



 
  




     





I 
’?




 
 

  





  
 



’?

 


 

 

 


 



   



’


 


   

 
 




’  

   
 ! 

4 
 




  
 I 
c
 c


I

I  c

Ú 


   





  
  




  


 
 

 

5 Ê  



 
 






 

 





  


V m   




 

 





 
   
 

 











  



5 ?

 


   


 






?    



 

   

  

 

 
 





 
   



 



Ã 
c
c

 c
m Ê  
)m?)?3

! +)
!m)m?
*
 m ?

 ?(*
)
+m) mm*

 mm* * *m*m) ?(




cI

’ 

 
  
!    
   "

##
!


$  $
# %
 
    " #
$
! 
  #
  
!    
 $
!
! 


#  $ 

’&

  
  
 $ 
 
  
#


  

  

 $ ! 

 
  "

  !   ! 
 
 
# 

'
  
(


’ % ! )**+,-..) 
 
 
 

  


 
$   
  /0+121*2    

’m



 





 
   


676.1.12 #    
$
 /772 78    


 




  




’       

#.2669911    
$



 #1912/867    
$ 
0

 

 


’ ?

  

 
 


 


   




 







    




 
6Ic