Open AccessConvergence of Stock Futures Markets – An Analytical Study of Indian Stock Markets
Author(s) -
Rajeesh Viswanathan,
Daniel Lazar,
Jahira Parveen
Publication year - 2019
Publication title -
international journal of recent technology and engineering
Language(s) - English
Resource type - Journals
ISSN - 2277-3878
DOI - 10.35940/ijrte.b1064.0782s419
Subject(s) - futures contract , cash , financial economics , stock (firearms) , spread trade , forward market , stock exchange , economics , business , finance , institutional investor , engineering , mechanical engineering , corporate governance , open end fund
Trading on stock futures was introduced in India on 9 th November 2001. Initially the contracts are settled in cash and in 2010 July 15 the SEBI allowed the exchanges to choose the physical settlement system for futures trading in stocks, with an aim to put the Indian futures and settlement system at par with other developed markets. So the stocks can be settled either through the cash or physical delivery. The study aims to investigate the price convergence between the spot and the futures prices and its effect on cash settled and the physical delivery in single stock futures. The study finds that there is an efficient convergence of both the market under the Physical delivery and its persistence throughout the contract period while compared with the cash settled single stock futures.