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Futures, options, swaps: India is yet to fully use well-meaning tools to avoid interest-rate shocks

On average, hardly 60% of corporate risks are hedged. Current market realities highlight the need for sound hedging practices. While newly introduced hedging instruments only amount to incremental measures, participation from a wide array of stakeholders is required to minimise risks to the financial system.
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madhavankutty-g
12 Aug 2019 11 Mins Read 0 comment
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Volatility is no more a dreaded word in finance. In fact, smart traders and investors have developed a fascination for it lately. Volatility offers this risk-loving tribe the opportunity to rake in big money. However, as the 2008 meltdown testifies, a Lehman Brothers-like catastrophe can hit the world any time. As monetary policies across the globe turn more accommodative,
to only incremental measures and participation from a wide array of stakeholders is needed to induce market participants to come forward. There is a need to move away from the current norm, where hardly 60% of a corporate book is hedged. Obviating this is essential to minimise the risks to the financial system. ( Graphics by Abdul Shafiq)
Volatility is no more a dreaded word in finance. In fact, smart traders and investors have developed a fascination for it lately. Volatility offers this risk-loving tribe the opportunity to rake in big money. However, as the 2008 meltdown testifies, a Lehman Brothers-like catastrophe can hit the world any time. As monetary policies across the globe turn more accommodative, to only incremental measures and participation from a wide array of stakeholders is needed to induce market participants to come forward. There is a need to move away from the current norm, where hardly 60% of a corporate book is hedged. Obviating this is essential to minimise the risks to the financial system. ( Graphics by Abdul Shafiq)

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