Thursday, 28 November 2019

Unit 2: Derivatives Market in India

0 comments

                              Unit 2: Derivatives Market in India  




Derivatives markets in India can be broadly categorised into two markets namely; financial derivatives markets and commodities futures markets.

The SEBI is authorised under the SEBI Act to frame rules and regulations for financial futures trading on the stock exchanges with the objective to protect the interest of the investors in the market.

NSE was the, first stock exchange in the country to provide nation-wide order-driven, screen-based trading system.

The futures and options trading system of NSE, called NEAT-F&O trading system, provides a fully automated screen-based trading for Nifty futures & options and stock futures & options on a nationwide basis and an online monitoring and surveillance mechanism.

The Derivatives Trading at BSE takes place through a fully automated screen-based trading platform called DTSS (Derivatives Trading and Settlement System).

The S & P CNX Nifty is a market capitalisation index based upon solid economic research.

It was designed not only as a barometer of market movement but also to be a foundation of the new world like index futures, index options and index funds.

Financial Derivatives    The Stock Exchange, Mumbai created history by launching the first exchange traded financial derivatives product in India, the Sensex Futures.

Index derivatives are derivative contracts which have the index as the underlying.

The most popular index derivatives contract the world over is index futures and index options.

Exchange Traded Funds (ETFs) are innovative products, which first came into existence in the USA in 1993.

They have gained prominence over the last few years with over $300 billion invested as of end 2001 in about 360 ETFs globally.

Chhota SENSEX: With a small or ‘mini’ market lot of 5, it allows for comparatively lower capital outlay, lower trading costs, more precise hedging and flexible trading.

Derivatives trading and Settlement System: The Derivatives Trading at BSE takes place through a fully automated screen-based trading platform called Derivatives Trading and Settlement System (DTSS).

Index Derivatives: Index derivatives are derivative contracts which have the index as the underlying.

Index Funds: An index fund is a fund that tries to replicate the index returns.

Limit Order: An order for buying or selling at a limit price or better, if possible.

Market Order: An order for buying or selling at the best price prevailing in the market at the time of submission of the order.

National Exchange for Automated Trading (NEAT): National Exchange for Automated Trading (NEAT) system is an anonymous order-driven system and operates on a strict price/time priority.

NIFTY: It was designed not only as a barometer of market movement but also to be a foundation of the new world like index futures, index options and index funds.

Sensex Index: An Index is an indicator of the broad market.

Stop Loss: An order that becomes a limit order only when the market trades at a specified price.





No comments:

Post a Comment