role of financial derivatives

Financial Markets Volume Ebullience: Making The Case For Toned Down Market Activity

The recent past has witnessed tremendous growth of the Indian securities market, the financial derivatives market included. While celebrating this fact it is also pertinent to bear in mind the market fundamentals that underlie and their resultant capacities and limitations. In the context of the derivatives market which inherently is a zero-sum game such exuberance may not be justified. Juxtaposing 'winner' and 'loser' statuses in a derivatives market reveals a perfect equilibrium - 'gain-loss parity', an equilibrium that embeds a disequilibrium of gains.