Often the argument put forth against derivatives trading is that the Indian capital market is not ready for derivatives trading.
Here, we look into the pre-requisites, which are needed for the introduction of derivatives and how Indian market fares:
PRE-REQUISITES & INDIAN SCENARIO
Large market Capitalisation
India is one of the largest market-capitalised countries in Asia with a market capitalisation of more than Rs.765000 crores.
High Liquidity in the underlying
The daily average traded volume in Indian capital market today is around 7500 crores. Which means on an average every month 14% of the country’s Market capitalisation gets traded. These are clear indicators of high liquidity in the underlying.
Trade guarantee
The first clearing corporation guaranteeing trades has become fully functional from July 1996 in the form of National Securities Clearing Corporation (NSCCL). NSCCL is responsible for guaranteeing all open positions on the National Stock Exchange (NSE) for which it does the clearing.
A Strong Depository
National Securities Depositories Limited (NSDL) which started functioning in the year 1997 has revolutionalised the security settlement in our country.
A Good legal guardian In the Institution of SEBI (Securities and Exchange Board of India) today the Indian capital market enjoys a strong, independent, and innovative legal guardian who is helping the market to evolve to a healthier place for trade practices.
Here, we look into the pre-requisites, which are needed for the introduction of derivatives and how Indian market fares:
PRE-REQUISITES & INDIAN SCENARIO
Large market Capitalisation
India is one of the largest market-capitalised countries in Asia with a market capitalisation of more than Rs.765000 crores.
High Liquidity in the underlying
The daily average traded volume in Indian capital market today is around 7500 crores. Which means on an average every month 14% of the country’s Market capitalisation gets traded. These are clear indicators of high liquidity in the underlying.
Trade guarantee
The first clearing corporation guaranteeing trades has become fully functional from July 1996 in the form of National Securities Clearing Corporation (NSCCL). NSCCL is responsible for guaranteeing all open positions on the National Stock Exchange (NSE) for which it does the clearing.
A Strong Depository
National Securities Depositories Limited (NSDL) which started functioning in the year 1997 has revolutionalised the security settlement in our country.
A Good legal guardian In the Institution of SEBI (Securities and Exchange Board of India) today the Indian capital market enjoys a strong, independent, and innovative legal guardian who is helping the market to evolve to a healthier place for trade practices.