An Overview of the Derivatives

Abstract

Derivative is a financial instrument that derived its value from the underlying asset. The futures, options and swaps play an important role in the derivatives market. Derivatives are useful to management of risk, discovery of price and the efficiency in the transactions. GST is levied on the charges which are collected by the stock broker. It is suggested that to adopt the suitability and appropriateness policy , integrate the procedures and systems for measurement of risk, obtain the liquid collateral or cash margin from the users. Interest rate futures may be undertaken by the banks to hedge over the risks , restrict on the structural products ,adopt a detailed scenario analysis and review the customer appropriatenes.