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Portfolio > ETFs > Broad Market

Pricing Transparency Drives India's Derivatives

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LONDON (–Growth in India’s financial derivatives market has accelerated over the past 12 to 18 months and a number of new derivative products have appeared during that time, according to a press release by SuperDerivatives, a provider of option pricing, trading and risk management systems.

The company said it is currently meeting “unprecedented demand” for its range of foreign exchange, commodity and interest rate option products in India. SuperDerivatives reported that it now lists such well-known Indian companies as Tata Steel, Reliance Industries and NYSE-quoted banks ICICI and HDFC among its customers.

According to the release, HDFC treasurer Sudhir Joshi said that SuperDerivatives’ foreign exchange option pricing system, known as SD-FX, has helped his bank devise customized options strategies for its clients. “We find SD-FX easy to use, and its pricing is a fair indication of the market,” he said. “SuperDerivatives has constantly been widening the range of products SD-FX covers, and it can price most kinds of exotics.”

Manish Tawde, vice president of structured products at Kotak Mahindra Bank, said he thought SuperDerivatives products had played a role in what he estimated to be a 300% expansion in the FX options market over the past two years. “The injection of transparency (the company’s products have brought about) has definitely helped,” he said. “If you can price even complex structures accurately before you start negotiating with counterparties, it helps get better and fairer pricing.”

In the opinion of Satyajit Kanjial, chief executive of consultancy Forexserve, the introduction of option pricing products has introduced informal benchmark prices to the markets, resulting in a greater level of market sophistication and allowing better pricing and monitoring of risk.

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Contact Bob Keane with questions or comments at [email protected].


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