Why do people talk about starting derivatives in India” if some derivatives already exist?
It is useful to note here that there are no exchange-traded financial derivatives in India today. Neither the dollar-rupee forward contract (Question 1.18) nor the option-like contracts (Question 1.20) are exchange-traded. These markets hence lack centralisation of price discovery and can suffer from counterparty risk. The next step in these areas is institutionalisation, and a broad-basing of access.
It is useful to note here that there are no exchange-traded financial derivatives in India today. Neither the dollar-rupee forward contract nor the option-like contracts are exchange-traded. These markets hence lack centralisation of price discovery and can suffer from counterparty risk. We do have exchanges trading derivatives, in the form of commodity futures exchanges. However, they do not use financials as underlyings. In this sense, the index futures market will be the first exchange-traded derivatives market, which uses a financial underlying.
