Financial Perspective On Foreign Exchange Derivatives: India And Abroad

INTRODUCTION

One of the most significant developments in the securities market has been through development and expansion of financial Derivatives. Derivates are the contract which derives its values from the underlying assets and has no independent value of its own. The contract in the derivatives prescribes the conditions which are required to be followed by the parties. The condition in the contract varies from transaction to transaction, although, some common clauses includes dates, the parties to the contract, resulting values, details of the underlying assets etc. The Derivatives are of four type's namely forward, future, Options and Swaps.

It is quite difficult to trace the origin of Derivatives but according to a publication of 1984 of Futures Industry Association on "An Introduction to the Futures markets", it is said that derivative trading dates back to 2000 B.C. It was during that period the merchants made consignment transaction for goods to be sold