National Stock Exchange (NSE) on April 2, release a report titled Future of Clearing by World Federation of Exchanges (WFE). When it comes to retail investors in India, Vikram Limaye, Managing Director & CEO, NSE made a point that entire equity derivative market is exchange traded as compared to other parts of the world where large portion of the derivatives market are OTC driven.

“This is a fundamental but important difference. Enough transparency, price discovery, regulations, enough visibility in terms of risk. Market has developed in the last 20 years in a much disciplined and well regulated manner,” says Limaye.

Further the research data indicates that over 95 per cent of what is classified as retail participation in derivatives market would be classified as the accredited investors who are high networth investors with risk capital.

Also when it comes to derivative markets, India does not have exotic derivatives, they are simple products and each product is actually approved by the regulator. Pointed out Limaye, “so it’s not someone going and selling some exotic structured product that nobody has any understanding of what the risk is and suddenly shows up in OTC space. They are all approved products by the regulators, simple products, exchange traded, monitored intra-day based on real time margins. It is very control governed risk and the nature of participation in derivatives market is through most sophisticated experienced investors.”