SUMMER TRAINING PRESENTATION ON

WORKING OF DERIVATIVES AND INVESTORS PERSPECTIVE

Presented by Vivek Singla

LUDHIANA STOCK EXCHANGE LTD

LOCATION- FEROZE GANDHI MARKET, LUDHIANA, PUNJAB.

Introduction
The Ludhiana stock exchange limited was established in 1981, by sh. S.P. Oswal of Vardhman group and sh. B.M. Lal Munjal of hero group. Further, the exchange has 295 members out of which 162 are registered with NSE as sub-brokers and 121 with BSE as sub-brokers.

DERIVATIVES DEFINED

Securities Contract (Regulation) Act,1956 defines Derivative to include A security derived from debt instruments, shares, secured / unsecured loan, risk instruments or contracts for differences, or any other form of security. A contract that derives its value from the prices / index of prices of underlying securities.

History Of Derivative trading at NSE

DATE
25th May, 2000.

EVENT
SEBI gave permission to NSE and BSE to do index futures trading. Trading of Nifty futures commenced at NSE. Trading of index option commenced at NSE. Trading of options on individual securities commenced at NSE.

12th June, 2000.

4th June, 2001

2nd july,2001

9th novemeber,2001

Individual stock futures were launched.

Types Of Derivative Contracts

Futures Options Forwards

Swaps

BENEFITS OF DERIVATIVES

RISK MANAGEMENT PRICE DISCOVERY OPERATIONAL ADVANTAGES MARKET EFFICIENCY EASE OF SPECULATION ECONOMIC FUNCTIONS

Objectives Of Study

To understand the Working of the Derivatives On NSE. To know the investors perception towards investment in derivative market.

Trading of derivatives on NSE

Trading system - NEAT-F&O trading system.

Basis of trading- Supports an order driven market.

RESARCH METHODOLOGY

Method of data collection: Collection of primary data using Questionnaires. The questionnaire was filled by around 50 people who were mainly from Ludhiana Region. It consist of people dealing in derivative market.

Interpretation & Findings

Most of the investors who invest in derivatives market are post graduate. Investors who invest in derivative market have a income of above 5,00,000 . Investors generally perceive slump in stock market kind of risk while investing in derivative market. People are generally not investing in derivative market due to lack of knowledge and difficulty in understanding and it is very risky also
.

 Most of investor purpose of investing in derivative market is to hedge their fund. People generally participate in derivative market as a investor or hedger. People generally prefer to take advice from news network before investing in derivative market.

Most of investors participate in stock index futures.

Most of investors make a contract of 3 month maturity period. Investors invest regularly in derivative market.

SUGGESTIONS & RECOMENDATIONS

A knowledge need to be spread concerning the risk and return of the derivative market. More variation in stock index future need to be made looking a demand side of investors.

RBI should play a greater role in supporting derivatives

There must be more derivative instruments aimed at individual investors.

LIMITATIONS OF STUDY

LIMITED TIME LIMITED RESOURCES VOLATALITY ASPECTS COVERAGE

THANK YOU