New insights into India’s single stock futures markets

HUNG, MAO-WEI and SO, LEH-CHYAN (2009): New insights into India’s single stock futures markets. Published in: Review of Futures Markets , Vol. 17, (2009): pp. 335-355.

Abstract

This study investigates correlations between India’s bustling single stock futures (SSFs) and its peculiar Badla mechanism. Data from the world’s most active SSF market, the National Stock Exchange (NSE) of India, are used. The results indicated that both the Badla mechanism and the introduction of SSFs seem to have contributed to the higher volatility of the spot markets. Our results show that the NSE’s success with SSFs can be attributed to the peculiar trading conventions of the Badla system. However, we propose that this success could come at the cost of market disability, suggesting that there is justification for strengthening market regulations.

• Item Type: MPRA Paper
• Language: English
• Keywords: single stock futures, Badla mechanism, National Stock Exchange (NSE) of India, volatility
• Subjects: G - Financial Economics > G1 - General Financial Markets > G12 - Asset Pricing ; Trading Volume ; Bond Interest Rates; G - Financial Economics > G1 - General Financial Markets > G13 - Contingent Pricing ; Futures Pricing; G - Financial Economics > G1 - General Financial Markets > G15 - International Financial Markets

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