The document discusses the meaning and development of derivatives in India. It defines derivatives as contracts whose value is derived from an underlying asset, and lists various types of underlying assets used. It outlines key milestones in the development of India's derivative market, including the establishment of committees to develop regulations and the launch of trading in index futures, stock options, and other derivatives on exchanges.
The document discusses the meaning and development of derivatives in India. It defines derivatives as contracts whose value is derived from an underlying asset, and lists various types of underlying assets used. It outlines key milestones in the development of India's derivative market, including the establishment of committees to develop regulations and the launch of trading in index futures, stock options, and other derivatives on exchanges.
The document discusses the meaning and development of derivatives in India. It defines derivatives as contracts whose value is derived from an underlying asset, and lists various types of underlying assets used. It outlines key milestones in the development of India's derivative market, including the establishment of committees to develop regulations and the launch of trading in index futures, stock options, and other derivatives on exchanges.
value is derived from value of some other asset known as underlying. Derivatives are based on wide range of underlying assets. • Metals such as Gold, Silver, Aluminium, Copper, Zinc, Nickel, Tin, Lead • Energy resources such as Oil and Gas, Coal, Electricity • Agri commodities such as wheat, Sugar, Coffee, Cotton, Pulses and • Financial assets such as Shares, Bonds and Foreign Exchange. Milestones in the development of Indian derivative market • November 18, 1996- L.C. Gupta Committee set up to draft a policy framework for introducing derivatives • May 11, 1998- L.C. Gupta committee submits its report on the policy framework • May 25, 2000 -SEBI allows exchanges to trade in index futures • June 12, 2000- Trading on Nifty futures commences on the NSE Contd.. • June 4, 2001 -Trading for Nifty options commences on the NSE • July 2, 2001 -Trading on Stock options commences on the NSE • November 9, 2001- Trading on Stock futures commences on the NSE • August 29, 2008- Currency derivatives trading commences on the NSE Contd.. • August 31, 2009 -Interest rate derivatives trading commences on the NSE • February 2010 -Launch of Currency Futures on additional currency pairs • October 28, 2010 -Introduction of European style Stock Options • October 29, 2010- Introduction of Currency Options Indian Derivatives Market • SEBI set up a 24–member committee under the Chairmanship of Dr. L. C. Gupta. • The committee submitted its report on March 17, 1998. • SEBI set up a group in June 1998 under the Chairmanship of Prof. J.R.Verma. • The committee submitted its report in October 1998. Features of Derivatives • Derivative are of three kinds future or forward contract, options and swaps and underlying assets can be foreign exchange, equity, commodities markets or financial bearing assets. • As all transactions in derivatives takes place in future specific dates. • Derivatives have standardized terms due to which it has low counterparty risk. • When value of underlying assets change then value of derivatives also changes and hence one can construct portfolio which is needed by one and that too without having the underlying asset. Participants • Hedgers • Speculators • Arbitrageurs Products • Forwards • Futures • Options • Swaps Products in Derivative markets Products • Call option • Put option Difference between Forward and Futures Difference between Futures and Options Interest Rate Swaps Interest Rate Swaps Importance