Indian Derivatives Market Evolution and Challenge

TL;DR

This paper compares the performance and relationship of derivatives markets on BSE and NSE in India, highlighting NSE's superior performance and emphasizing the need for regulatory strengthening to enhance market growth.

Contribution

It establishes a comparative framework for BSE and NSE derivatives, analyzing their performance and relationship with the cash market and volatility, and highlights NSE's leading position.

Findings

NSE derivatives outperform BSE in trading volume and contracts.

NSE's derivatives market is comparable to global exchanges.

Market needs stronger regulations and frameworks.

Abstract

The study is conducted to establish the framework for comparing the relation in performance of the derivatives of BSE and NSE in India and to analyse the relationship of derivatives with the cash market and the market volatility. The exchange-traded equity derivatives were considered for the study. It was found that the performance of derivatives in NSE is a lot higher than in BSE and the NSE is on par with the global exchanges compared to BSE in terms of the number of contracts traded for Stock Index Options and Futures and also Stock Futures. Hence derivatives market needs to strengthen further with the number of contracts traded and turnover in all the derivative instruments with more strong regulations and a robust framework protecting the interest of the investors. This study enables Derivative Industry to progress towards its goals and objectives in a more efficient way.