Derivatives Latest News
IndusInd Bank reported derivative losses of ₹2,100 crore on March 10, 2025, leading to a 23% decline in its share price.
About Derivatives
- Financial contracts whose value depends on an underlying asset, index, or rate.
- Used for hedging risks, speculation, and portfolio diversification.
- Common underlying assets: Stocks, bonds, commodities, currencies, interest rates, and market indexes.
Types of Derivatives
|
Derivative Type |
Definition |
Example |
|
Futures |
Contract to buy/sell an asset at a fixed price on a future date. |
Commodity traders hedging against price fluctuations. |
|
Options |
Gives the right (but not obligation) to buy (call) or sell (put) an asset at a set price before a deadline. |
Stock options in equity markets. |
|
Swaps |
Agreements to exchange cash flows based on financial metrics. |
Interest rate swaps to reduce borrowing costs. |
|
Forwards |
Private agreements (OTC) to buy/sell assets at a future date. |
Currency forward contracts for importers/exporters. |
Exchange-Traded Currency Derivatives (ETCDs)
- Standardized contracts allow investors to speculate on future currency exchange rate movements.
- Traded on stock exchanges, unlike Over-the-Counter (OTC) derivatives which are private.
Derivatives FAQs
Q1: What are derivatives in the financial market?
Ans: Derivatives are financial contracts whose value is derived from an underlying asset such as stocks, commodities, currencies, or interest rates.
Q2: Why are derivatives important?
Ans: Derivatives help in risk management (hedging), price discovery, and improving market efficiency.
Q3: What are the risks associated with derivatives?
Ans: Derivatives carry risks such as market volatility, counterparty default, and speculative losses.
Q4: What is the role of SEBI in regulating derivatives in India?
Ans: SEBI (Securities and Exchange Board of India) regulates derivatives trading in stock and commodity exchanges to ensure transparency and reduce market manipulation.
Source: IE
Last updated on January, 2026
→ Check out the latest UPSC Syllabus 2026 here.
→ Join Vajiram & Ravi’s Interview Guidance Programme for expert help to crack your final UPSC stage.
→ UPSC Mains Result 2025 is now out.
→ UPSC Notification 2026 is scheduled to be released on January 14, 2026.
→ UPSC Calendar 2026 has been released.
→ UPSC Prelims 2026 will be conducted on 24th May, 2026 & UPSC Mains 2026 will be conducted on 21st August 2026.
→ The UPSC Selection Process is of 3 stages-Prelims, Mains and Interview.
→ Prepare effectively with Vajiram & Ravi’s UPSC Prelims Test Series 2026 featuring full-length mock tests, detailed solutions, and performance analysis.
→ Enroll in Vajiram & Ravi’s UPSC Mains Test Series 2026 for structured answer writing practice, expert evaluation, and exam-oriented feedback.
→ Join Vajiram & Ravi’s Best UPSC Mentorship Program for personalized guidance, strategy planning, and one-to-one support from experienced mentors.
→ UPSC Result 2024 is released with latest UPSC Marksheet 2024. Check Now!
→ UPSC Toppers List 2024 is released now. Shakti Dubey is UPSC AIR 1 2024 Topper.
→ Also check Best UPSC Coaching in India
