What is the present status of derivatives in the equity market?
As mentioned in Question 1.6, trading on the spot market” for equity has actually always been a futures market with weekly or fortnightly settlement (this is true of every market in the country other than OTCEI). These futures markets feature the risks and difficulties of futures markets, without the gains in price discovery and hedging services that come with a separation of the spot market from the futures market. India’s primary market has experience with derivatives of two kinds: convertible bonds and warrants (a slight variant of call options). Since these warrants are listed and traded, options markets of a limited sort already exist. However, the trading on these instruments is very limited. The recent ICICI bond issue bundles a twelve-year expiration BSE Sensex warrant with the bond. If this warrant is detached and traded, it would be an exchange-traded index derivative. A variety of interesting derivatives markets exist in the informal sector. These markets trade contracts lik
