Derivatives, ideal option for speculators - Analyst
Some investors who would purchase a stock with the sole purpose of
making a profit may not know the difference between speculation and
investing. Speculators who don't care much about the inherent value of
the stock could create a lot of volatility in the market. Over
speculation could affect even the best performing market in the world.
Arup Mukherjee, the Assistant Vice President of the National Stock
Exchange of India Ltd. said in Colombo yesterday that creating a
different play ground for speculators in the form of a derivatives
market could be the ideal solution to this problem.
Addressing a seminar organised by the Colombo Stock Exchange on
derivatives Mukherjee said that there is lot of potential for derivative
instruments in Sri Lanka.
"Trade volumes of derivative markets worldwide are growing at a rapid
rate. Derivative instruments such as futures, options and swaps are
increasingly popular among tech-savvy youth in India. It could be the
ideal market for the young people in Sri Lanka," Mukherjee said.
He said creating awareness among people about derivative instruments
such as futures and option is very important.
"Increasing the number of participant will help the liquidity levels
of the market. A key feature of derivatives market is the superior
liquidity level," Mukherjee said. (CK)