Investment Options

In the past, in almost all the stock exchanges, the broker members of the governing boards have been critical in the governance of the stock exchanges. The reconstitution of the governing boards of the stock exchanges by SEBI, which reduced the broker representation on these boards to 50%, had helped in making the boards more independent and minimized the influence of brokers. However, in most stock exchanges on account of the brokers retaining posts of the officer bearers of the stock exchanges till recently viz. president, vice-president and treasurer, they continued to play a dominant role in the management of the stock exchange. The fall-out of this practice has been that most stock exchanges have failed to develop good corporate governance practices and strong management teams. This has not only been a perception but also a reality in most stock exchanges. Conflicts of interest have bedeviled the operations of the Continue reading

Future contract is normally defined as a standardized agreement with an organized exchange to buy or sell some item, such as a currency or commodity at a fixed price at a certain date in the future. Some contracts for example, foreign currency futures, provide for cash delivery; others, such as Eurodollar futures, are based on some reference price and allow only for cash settlement at maturity. The purpose of futures is not to obtain delivery but to replicate without credit risk, the gains or losses that would occur from an equivalent forward contract. In principle, currency futures are similar to foreign exchange forwards in that they are contracts for delivery of certain amount of a foreign currency at some future date and at known price. But in practice, most futures contracts are terminated before maturity. The most important uses of currency futures are listed below; 1. Hedging: Presume Entity A Continue reading