India’s $6 trillion derivatives frenzy has government worried (2024)

FAQs

India’s $6 trillion derivatives frenzy has government worried? ›

The surge in Indian equity derivatives that's driven up volumes to the highest in the world is spurring concern among the nation's policymakers that the frenzy may hurt efforts to harness household savings for productive purposes.

The National Stock Exchange of India cemented its place as the largest derivatives exchange in the world in 2023.

Derivatives are financial contracts that draw their value from an underlying asset. The common types of derivatives include futures, options, and swaps. Derivatives are used for hedging or speculation. In India, the derivative market is regulated by the Securities and Exchange Board of India.

About National Stock Exchange of India Limited (NSE):

National Stock Exchange of India (NSE) is the world's largest derivatives exchange by trading volume (contracts) as per the statistics maintained by Futures Industry Association (FIA) for calendar year 2023.

Derivatives are financial instruments whose value is derived from an underlying asset or a group of assets. These assets range from stocks, bonds, commodities, currencies, interest rates, or market indices. The derivatives market is a financial marketplace where derivative contracts are bought and sold.

In finance, there are four basic types of derivatives: forward contracts, futures, swaps, and options.

Derivatives can be a very convenient way to achieve financial goals. For example, a company that wants to hedge against its exposure to commodities can do so by buying or selling energy derivatives such as crude oil futures. Similarly, a company could hedge its currency risk by purchasing currency forward contracts.

Derivatives are financial instruments that derive their value from an underlying asset, index, or reference rate. Examples of derivatives include futures contracts, options contracts, swaps, and forward contracts.

India's largest and fifth largest world stock exchanges by market cap, the National Stock Exchange (NSE), with a market cap of around $5 trillion, comprises 50 of the largest Indian companies, like Infosys, ICICI Bank, Larsen & Toubro, and more, has thereby revolutionised the trading system in India.

NSE. The National Stock Exchange (NSE) is the largest stock exchange in India. In terms of market capitalisation, it is also the eleventh-largest stock exchange in the world. You can trade in seven capital market categories at the NSE.