How would the introduction of derivatives trading impact markets?
It depends on how the product is used. If there are adequate safeguards, the potential is tremendous. It will improve liquidity and trading on the bourses. Competition in the mutual fund industry has intensified with Prudential’s entry. What will be the end result of heightened competition in the mutual fund business? The mutual fund industry is at its early stage of growth in India. In countries like the US, equity funds comprise 50% of the mutual fund industry. The numbers are mind-blowing and we are nowhere near that level. The entry of more players means that the market will expand. Look at our own figures. We started at about Rs 160 cr in assets under management in Feb.’98, and are, today, close to Rs 500 cr.
