Understanding the Derivative Contract and Its Regulatory Challenges in India

Abstract

The present research will be focusing on the critical analysis of the derivative instrument with special emphasis on Indian derivative market. After the opening of the derivative market in India, there are confusion and fear concerning the use and enforcement of the derivative contract evident from many cases filed in the different High Courts and Supreme Court. The main theme of the research is to discuss the legal aspect of derivative instruments, problem and challenges in this area, loopholes in the existing legal framework, failure of the existing laws to address the issues, changing dimension and suggestions in the form of proposal to be incorporated in the current legal framework to regulate this market efficiently. Although the India legal frameworks on derivative contracts are consistent with international norms, there are certain elements which need to be addressed adequately in the line of adopting international best practices for this market.