13 chapters with 34 sections
India hosts one of the most dynamic derivatives markets in Asia, with major activity centered around the National Stock Exchange of India Limited (NSE) and BSE Limited (BSE). Derivative instruments such as futures and options are widely traded, particularly in equities, interest rates, and commodities. The market has grown substantially over the past two decades, supported by robust infrastructure, a growing base of institutional and retail investors, and increasing participation from foreign entities. India's derivatives market operates under a regulatory framework designed to ensure transparency, investor protection, and systemic stability.
Historical Context and Market Evolution in India: India’s derivatives market has evolved significantly over the past few decades, rooted in broader economic liberalization efforts that began in the early 1990s. The formal introduction of exchange-traded derivatives came about in 2000, when NSE launched index futures contracts, followed by single-stock futures and options. The regulatory framework was shaped early on by the Securities and Exchange Board of India (SEBI), which played a pivotal role in ensuring transparency, investor protection, and systemic stability. Unlike many Western markets, India’s derivatives space grew under a tightly regulated environment, avoiding many of the pitfalls that contributed to the 2008 global financial crisis. However, the crisis still influenced India’s approach, prompting refinements in risk management and surveillance mechanisms. Over time, the country has also witnessed growing interest in commodity derivatives, overseen by bodies like the Reserve Bank of India (RBI) and the Forward Markets Commission (later merged with SEBI), reinforcing India’s role as an emerging derivatives market with strong regulatory oversight.
