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Global Derivative Market Case Study

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Global derivative market: Early forward contracts in the US addressed merchants' concerns about ensuring that there were buyers and sellers for commodities. However "credit risk" remained a serious problem. To deal with this problem, a group of Chicago businessmen formed the Chicago Board of Trade (CBOT) in 1848. The primary intention of the CBOT was to provide a centralized location known in advance for buyers and sellers to negotiate forward contracts. In 1865, the CBOT went one step further and listed the first "exchange traded" derivatives contract in the US; these contracts were called "futures contracts". In 1919, Chicago Butter and Egg Board, a spin-off of CBOT, was reorganized to allow futures trading. Its name was changed to Chicago …show more content…

It was followed by launching various derivative products such as index options, stock options, stock future, interest rate, future CNX IT future and options, Bank Nifty futures and options, CNX Nifty Junior futures and options, CNX100 futures and options, Nifty Mid Cap-50 future and options, Mini index futures and options, Long term options. Currency futures on USD-rupee, Defty future and options, interest rate futures, SKP CNX Nifty futures on CME, European style stock options, currency options on USD INR, 91 days GOI T.B. futures, and derivative global indices and infrastructures …show more content…

J.R Varma, member of SEBI and Chairman of the Committee which formulated the risk containment measure for the derivative market. As a product innovation BSE introduced the trading in Index Options in 2001 and Stock options in 2001 and Single stock futures were introduced on 2002. In 2008 ‘Long dated Options’ were also introduced by BSE, going ahead On 1 OCTOBER 2008 BSE launched its CURRENCY DERIVATIVES segment in dollar-rupee currency futures as the exchange traded currency futures contracts it facilitated easy access, increased transparency, Efficient price discovery, better counterparty credit risk management, wider participation and reduced transaction costs. Need for derivatives Market: Derivative market performs various economic functions like.  Transferring of Risk.  Discovery of future as well as current

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