New insights into India’s single stock futures markets

Mao-Wei Hung and Leh-chyan So ()

MPRA Paper from University Library of Munich, Germany

Abstract: This study investigates correlations between India’s bustling single stock futures (SSFs) and its peculiar Badla mechanism. Data from the world’s most active SSF market, the National Stock Exchange (NSE) of India, are used. The results indicated that both the Badla mechanism and the introduction of SSFs seem to have contributed to the higher volatility of the spot markets. Our results show that the NSE’s success with SSFs can be attributed to the peculiar trading conventions of the Badla system. However, we propose that this success could come at the cost of market disability, suggesting that there is justification for strengthening market regulations.

Keywords: single stock futures; Badla mechanism; National Stock Exchange (NSE) of India; volatility (search for similar items in EconPapers)
JEL-codes: G12 G13 G15 (search for similar items in EconPapers)
Date: 2009
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