A comprehensive study of indian derivatives

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A comprehensive study of indian derivatives

History of the concept[ edit ] John Maynard Keynes envisaged the financial transaction tax in The year saw an early implementation of a financial transaction tax in the form of a stamp duty at the London Stock Exchange. The tax was payable by the buyer of shares for the official stamp on the legal document needed to formalize the purchase.

As of [update]it is the oldest tax still in existence in Great Britain. Instead of a fixed tax amount per transaction, the tax was in the amount of 0.

This was doubled to 0. Inin the wake of the Great DepressionJohn Maynard Keynes advocated the wider use of financial transaction taxes.

In the Bretton Woods system for stabilizing currencies effectively came to an end.


In that context, James Tobininfluenced by the work of Keynes, suggested his more specific currency transaction tax for stabilizing currencies on a larger global scale. Feige proposed extending the tax reform ideas of John Maynard Keynes[11] James Tobin [12] and Lawrence Summers[13] to their logical conclusion, namely to tax all transactions.

The goal of the APT tax is to significantly improve economic efficiency, enhance stability in financial markets, and reduce to a minimum the costs of tax administration assessment, collection, and compliance costs.

One non-tax regulatory equivalent of Tobin's narrow tax, to require "non-interest bearing deposit requirements on all open foreign exchange positions", was considered in particularly but rejected.


Economic literature of the period ss emphasized that derivatives and other variations in the terms of payment in trade-related transactions so-called "swaps" for instance provided a ready means of evading any tax other than the Automated Payment Transaction tax since it uniformly taxed all transactions.

Other measures and exemptions from such transaction taxes, to avoid punishing hedging a form of insurance for cashflows were also proposed. These tended to lead to generally more complex schemes that were not implemented, in part due to lack of standardization of risk reporting under the Basel I framework, which was itself a response to s financial speculation crises.

Indian Derivatives Market | BSE

However, disclosure had not kept pace with practices. Regulators and policy-makers and theorists by the s had to deal with increasingly complex financial engineering and the "avoidance by change of product mix In this fashion, markets would innovate so as to avoid the tax" as they were doing with the creation of financial derivatives.

A comprehensive study of indian derivatives

Advocates including Pollin, Palley and Baker [22] emphasized that transaction taxes "have clearly not prevented the efficient functioning of" financial markets in the 20th century. Many theorists raised the issue that hedging and speculation were more of a spectrum than a distinct duality of goals.

Bodnar et al, show that companies usually incorporate predictions of future price levels i.

A comprehensive study of indian derivatives

If hedging is really just about reducing risk, then why should our expectations of future market direction have any bearing on our hedging decisions? On one level at the extremesthere is no doubt that hedging and speculation are very different activities.On the one hand integration of the Indian capital market with global market open the boundaries for investment to everyone, which also helps in increasing the cash flow, on the other hand there has increased in financial risk as the frequent changes in the and that tool was Derivatives.

This study helps in analyzing the facts behind. Programme Overview. The Certificate in Derivatives Market Strategies (CDMS), jointly offered by NISM and Moody's Analytics, is an internationally recognised certification that provides the knowledge and skills required to enter into and progress in a variety of roles that employ derivatives.

Introduction of Indian Derivatives Market - BSE created history on June 9, by launching the first Exchange-traded Index Derivative Contract in India i.e.

futures on the capital market benchmark index - the BSE Sensex. A Study of Derivatives Market in India and its Current Position in Global Financial Derivatives Markets prospects and challenges of derivatives in India and status of Indian derivatives market vis-à-vis global derivative market.

Keywords: Bombay stock exchange, Derivatives, Exchange rate, Forward, Futures, National stock exchange. The derivatives market is the financial market for derivatives, financial instruments like futures contracts or options, which are derived from other forms of assets.

Related to Dissertation Study on Derivatives Market in India. Also in this paper a study of investment pattern of general public among derivatives has been done The major objective of the study is an Indian index.

25 May Multi Commodity SEBI gave permission to NSE and BSE to do index futures trading.

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