PAPER ON THE TOPIC – FINANCIAL

DERIVATIVES – AN INNOVATIVE BUSINESS

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.