Efficiency of crude oil derivatives markets of India

Abstract

The Indian economy is witnessing a mini revolution in commodity derivatives and risk management. Commodity options trading and cash settlement of commodity futures had been banned since 1952 and until 2002 commodity derivatives market was virtually non-existent, except some negligible activity on an OTC basis. Now in 2006, the country has 3 national level electronic exchanges and 21 regional exchanges for trading commodity derivatives. The number of commodities allowed for trading is close to 100. The value of trading has been booming and is likely to cross the $ 1 Trillion mark in 2006 and, if all goes well, seems to be set to touch $5 Trillion in a few years.