Financial Derivatives : The Currency and Rates Factor

chapter 2

Derivatives Introduced: Indian Perspective

LEARNING OBJECTIVES

This chapter includes key acts, rules and regulations which provide an insight into the evolution of derivatives in India and their legal status. The contents of this chapter are organized in the following order:

 

1. Derivatives: Legal Definition

2. Major Types of Derivatives

3. Participants in the Derivatives Market

4. History and Legalization of Derivatives in India

5. Introduction of Currency Futures and Options on Exchanges in India

DERIVATIVES: LEGAL DEFINITION

Clause (a) of Section 45 U of the Reserve Bank of India Act, 1934 defines ‘derivative’ as follows:

‘Derivative means an instrument, to be settled at a future date, whose value is derived from change in underlying ...