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Indian Derivatives Market - A Regulatory and Contextual Perspective Shyamala Gopinath

Indian Derivatives Market - A Regulatory and Contextual Perspective* Shyamala Gopinath

Let me first thank Euromoney for inviting me for this seminar on Indian derivatives market. The esoteric world of derivatives has come into sharp focus in recent times precisely on account of their complexity and recent events have triggered a debate on their impact on the financial system stability. My discussion today will be confined to the regulatory framework in India in regard to forex, debt and credit derivative markets and the regulatory imperatives arising in dealing with these instruments and their future development, particularly in the context of global developments. The financial markets, including derivative markets, in India have been through a reform process over the last decade and a half, witnessed in its growth in terms of size, product profile, nature of participants and the development of market infrastructure across all segments - equity markets, debt markets and forex markets. Derivative markets worldwide have witnessed explosive growth in recent past. According to the BIS Triennial Central Bank Survey of Foreign Exchange and Derivatives Market Activity as of April 2007 was released recently and the OTC derivatives segment, the average daily turnover of interest rate and non-traditional foreign exchange contracts increased by 71 per cent to US $ 2.1 trillion in April 2007 over April 2004, maintaining an annual compound growth of 20 per cent witnessed since 1995. Turnover of foreign exchange options and cross-currency swaps more than doubled to US $ 0.3 trillion per day, thus outpacing the growth in ‘traditional’ instruments such as spot trades, forwards or plain foreign
RBI Monthly Bulletin November 2007

* Keynote address delivered by Smt. Shyamala Gopinath,

Deputy Governor, Reserve Bank of India at the Euromoney Inaugural India Derivatives Summit,...

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