Advantage of Derivatives
- Derivatives help toimprove market efficiency because risks can be isolated and sold to those who are willing to accept taking these risks at the least cost.
- The use of derivatives breaks risk into pieces, which can be managed independently. Thus, from the market prospective, derivatives offer the free trading of financial risks.
- The Stock exchange, Mumbai lauched its first Exchange traded financial derivative product in Sensex Futures on June 9,2000. NSE commenced trading in Index Futures on June 12, 2000.
- It was one more important step forward in the Capital Market Reforms when Securities & Exchange Board of India (SEBI) allowed trading in equities-based derivatives on the Stock Exchange s in the country in June 2000.
- In view of Positive market & investors interest in derivatives, NSE introduced trading in index options on June 4, 2001 while options on individual securities was launched on July 2, 2001.
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