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<b>Letters:</b> Derivative risks

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Business Standard New Delhi
In their article "Why derivatives are a Pyrrhic triumph for our equity markets" (July 21) Praveen Chakravarty and T V Somanathan make the interesting point that derivatives trading in Indian stock markets is over 16 times that in shares trading - and that this trading has grown steadily and sharply over the past 13 years. A comparison with some other countries is drawn, but the United States, the United Kingdom, Germany, France, Japan, Singapore, among others, are missing from this comparison for reasons that are not clear. Derivatives trading is reportedly done by sophisticated investors and must be profitable - otherwise such a sustained increase in volumes would not have taken place. The question is whether this trading exposes the Indian market to any major risks - even in black swan events - as in 2008.

Alok Sarkar Kolkata
 
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First Published: Jul 24 2014 | 9:02 PM IST

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