How to open a Derivative Account in India for Trading?
In a word, derivative is meant for financial asset like contracts, different types of options, security deposits which are mortgaged. You should know that the particular value of the derivatives relies on the underlying property/asset financial tool. Let us examine how derivative trading performs in India. NSE has brought a new plan S&P CNX Nifty3 in the year of 2000. With the enactment of the plan/scheme, derivative industry has entered into India.
The major objective of this S&P CNX Nifty3 is to give the golden opportunity to international traders/ foreign investors like FIIs to come to India for making investment in the domestic Forex trading in the country.
Frankly speaking, at the initial stage, the response was not good enough because of the absence of the provision for profitable derivatives to tackle the critical situation. According to the analysts, at the time there was no upgraded and modern financial foundation in the stock market and for this reason, the whole concept on the derivative project faced failure.
Study Various Features
There are a number of factors which are responsible for the inordinate delay in starting the derivative marketing/trading in Indian Stock Exchange. Frankly speaking, to successfully run the derivative business, there is requirement of a highly sophisticated infrastructure which will be fully equipped with computer lab for enhancing the online trading, the well decorated foray and the proper janitorial services. In addition, Indian market at that point of time was facing the financial crunch, low investment, lower percentage of the foreign revenues and many more shortcomings.
However, this fantastic and well planned profitable business was started with full fledge in 2000. Since then lot of experiment and research have been going on how to make this trading much more popular and profitable so that people will get new ways to earn huge amount of money without facing hazard or financial burden. Frankly speaking, let me tell you that right now the derivative market in India is very bright and prosperous. It will expand at rapid speed if the proper care is taken.
According to the experts and analysts, NSE and BSE have gained the adequate profit in this year. Their effort is a matter of praiseworthy. If you do vast study u will find that OTC contracts have earned bagged much popularity and recognition in the Indian derivative trading.
If you look back to check the background of the development in the area of derivative trading, you will come to know that long way back in 1875, the derivative was extensively traded in the shape of future contracts. Again in the case of forward contract which includes essential hard products, currency or any type of security, India also performs excellently. OTC type agreement has earned maximum popularity in this country.
FRA is a sort of contract which is basically utilized for lending or borrowing currencies for the limited period of time on the deposited principal in future. This is a contract in which both parties will get involved to make a fantastic financial dealing on the specific percentage of interest for the particular limited period of time that has been fixed at an earlier date. Let me tell you that there is a huge prospect in this FRA market in India.
Option is a type of written agreement in which purchaser has legal permission to do business or trading but he is not under the legal compulsion to trade with the second party. He is not compelled to get involved in any dealing or exchange of a specific commodity/underlying property. You can choose the option in the form of OTC contracts. It is of different kinds and you should know the multi-functionalities of this specific contract. Options in the form of equities are now available for excellent trading in India. You can try your luck by opting for the equity option to earn profits.
Lastly, on behalf of the government, a number of steps have been taken to revitalize the derivative market in India. SEBI has already offered their full support in the case of giving legal consent/authorization to mutual funds for expanding derivative trading. It is good indication for the speedy development in this arena.
As per the financial advisors, to energize the financial industry and derivative marketing in the country, there is the requirement of the proper financial infrastructure and powerful machinery to speed up the exchange process by paying off the dues or solving disputed issues for bringing mobility to this internationally recognized trading in India