1.

INTRODUCTION

1.1 INTRODUCTION TO THE STUDY

A derivative is a security whose value depends on the value of an underlying asset. Underlying asset can be bullion, index, share, bonds, currency, interest etc. Derivative securities have been very successful innovation in capital market. A derivative is a product whose value is derived from the value of one or more underlying variables or assets in a contractual manner. The underlying asset can be equity,forex,commodity or any other asset. The origin of derivatives can be traced back to the need of farmers to protect themselves against fluctuations in the price of their crop. From the time it was sown to the time it was ready for harvest,farmers would face price uncertainty. Through the use of simple derivative products it was possible for the farmer to partially or fully transfer price risks by locking in asset prices. These were simple contracts developed to meet the needs of farmers and were basically a means of reducing risk. Example 1:- A farmer who sowed his crop in june faced uncertainty over the price he would receive for his harvest in September. In years of scarcity he would probably obtain attractive prices. However during times of oversupply he would have to dispose off his harvest at a very low price. Clearly this meant that the farmer and his family were exposed to a high risk of price uncertainty. Example 2:- on the other hand a merchant with an ongoing requirement of grains too would face a price risk that of having to pay exorbitant prices during dearth although favourable prices could be obtained during periods of oversupply. Under such circumstances it clearly made sense for the farmer and the merchant to come together and enter into a contract whereby the price of the grain to be delivered in September could be decided earlier. What they would then negotiate happened to be a futures type contract which would enable both parties to eliminate the price risk. In 1848 the Chicago board of trade or CBOT was established to bring farmers and merchants together. A group of traders got together and created to arrive contracts proved useful as a device for hedging and speculation on price changes. These were eventually standardized and in 1925 the first futures clearing house came into existence. Today derivatives contract exist on a variety of commodities such as corn,pepper,cotton,wheat,silver, etc. Besides commodities derivatives contracts also exist on a lot of financial underlyings like stocks,interest rate, exchange rate etc.

Derivatives have vital role to play in enhancing shareholder value by ensuring access to the cheapest source of funds. Active use of derivatives instruments allows the overall business risk profile to be modified, thereby providing the potential to improve earning quality by offsetting undesired risk. Under my project report, I have studied various trends that come in the way of Derivatives market. Because impression is usually given that losses arose from derivatives are extremely complex and difficult to understand financial strategies. So after interviewing with different brokers, Investors and dealers, I have tried to give a solution to these complexities. I have also found out that what would be the future of derivative market in India on the basis of interviews and observations of brokers, dealers and investors regarding future, I have found out that derivatives can indeed be used safely and successfully provided a sensible control and management strategy is established and executed. In spite of that more awareness should be done and technical expertise knowledge should be more expanded. The emergence of the market for derivative products, most notably forwards, futures and options, can be traced back to the willingness of risk adverse economic agents to guard themselves against uncertainties arising out of fluctuations in asset prices. By their very nature, financial markets are marked by a very high degree of volatility. Through the use of derivative products, is possible to partially or fully transfer price risks by a locking - in asset prices. As instruments of risk management, these generally do not influence the fluctuation in the underlying asset prices. However, by locking-in asset prices, derivative products minimize the impact of fluctuations in asset prices on the profitability and cash flow situation of risk-averse investor.

1.2 RESEARCH METHODOLOGY

Research is a procedure of logical and systematic application of the fundamentals of science to the general and overall questions of a study and scientific technique by which provide precise tools, specific procedures and technical, rather than philosophical means for getting and ordering the data prior to their logical analysis and manipulations. Different type of research design is available depending upon the nature of research project, availability of able manpower and circumstances. The study about ANALYSIS OF DERIVATIVES MARKET is exploratory as well as descriptive in nature .Discussion with experts, internet surfing, and journals were studied to explore more about the concerned objective and better understanding of the problem. After that questionnaire was prepared to meet the desired objective Sources of Data: The source of data includes primary and secondary data sources. Primary Sources Primary data is data collected for first time specially for the purpose for which study is being conducted i.e. the problem under study. Secondary Sources The secondary data is data, which is collected and compiled for the different purpose, which are used in research for this study. The secondary data include material collected from: - Newspaper - Magazine. - Internet.

1.3 NEED OF THE STUDY

Now a day these financial instruments are booming and these are efficient financial instruments bythe financial advisors to hedge risk. These are also proved practically as efficient financial instruments toreduce risk. Now a day these derivatives are in emerging stage in India. So there is a lot of scope todevelop more in this derivative market. Some uneducated people are unaware of this. So we have toaware of them about this to develop market. As a finance people we have to develop more advancedtechniques to reduce the risk so that we can provide efficient financial with low risk in this recessionperiod. These types of instruments will reduce the effect of recession on market by attracting theinvestors with low risk. An Investor can choose the right underlying or portfolio for investment whichrisk free.

The study would explain how risk in cash market can be compensated with futures and options.

The study elucidates the role of futures and options in Indian financial markets.

The study is limited to Derivatives with special references to futures and options in the Indian context .The study has only made humble attempt at evaluating derivatives only in Indian markets.

The study is limited to the analysis made for types of instruments of derivatives .Each strategy is analyzed according to its risk and return characteristics and derivatives performance against the profit and policies of the company. The study is not based on the international perspective of derivatives which exists in DOW JONES and NASDAQ.

1.4 OBJECTIVE OF THE STUDY

The main objectives of my final project report are as follows:-

To study the role of derivatives in Indian financial markets.

To study the functioning of futures and options in financial market.

To know what are the payoffs of futures & options.

Trading of futures and options in stock exchange.

Learing and settlements of futures and options.

To study various trends in market.

1.5 SOURCES OF DATA

Primary data: Primary data was collected from the respondents who are trading in Indian Markets. Secondary data: Secondary data was provided by the organization and was gathered from the official websites of the respective organizations. Information about the history and various factors affecting the price performance has been studied from various Internet sites. The data was sorted to find out the various factors that help in suggesting the decision taking for the individuals to buy and sell in this sector

1.6 LIMITATIONS:
No study is complete in itself, however, good it may and every study has some limitations y y y Time is the main constraint of my study. Availability of information was not sufficient because of less awareness among investors / brokers.

Sample size is not enough to have a clear opinion.

2. PROFILE

2.1 INDUSTRY PROFILE

HISTORICAL ASPECT OF DERIVATIVES

The need for derivatives as hedging tool was first felt in the commodities market. Agricultural F&O helped farmers and PROCESSORS hedge against commodity price risk. After the fallout of BRITAIN WOOD AGREEMENT, the financial markets in the world stared undergoing radical changes, which give rise to the risk factor. This situation led to development of derivatives as effective Risk Management tools.

38Derivatives trading in financial market started in 1972 when Chicago Mercantile Exchange opened its international Monetary Market Division (IIM). The IMM provided an outlet for currency speculators and for those looking to reduce their currency risks. Trading took place on currency. Futures, which were contracts for specified quantities of given currencies, the exchange rate was fixed at time of contract later on commodity future contracts was introduced then followed by interest rate futures.

Looking at the liquidity market, derivatives allow corporate and institutional investors to effectively manage their portfolio of assets and liabilities through instruments like stock index futures and options. An equity fund e.g. can reduce its exposure to the stock market and at a relatively low cost without selling of part of its equity assets by using stock index futures or index options. Therefore the stock index futures first emerged in U.S.A. in 1982.

PRODUCTS, PARTICIPANTS, AND FUNCTIONS Derivatives contracts have several variants. The most common are FORWARDS, FUTURES, OPTIONS AND SWAPS. The following three categories of Participants-Hedgers, Speculators, and Arbitrageurs.

1. Hedger :- Hedgers face risk associated with the price of an asset. They use futures or options markets to reduce the risk. Thus, they are operation who want to eliminate the risk composing of their portfolio.

2. Speculators : They wish to be on future movements in the price of an asset. A speculator may buy securities in anticipation of rise in price. If this expectation comes true he sells the securities at a higher price and makes a profit. Usually the speculator does not take delivery of securities sold by him. He only receives and pays the differences between the purchase and sale prices.

3. Arbitrageurs : They are in business to take advantage of discrepancy between price in two different markets. If for example, they see the future price of an asset getting out of line with cash price, they will take off setting positions in two markets to lock in profit.

REASON FOR STARTING DERIVATIVES

1. Counter party risk on the part of broker, in case it ask money from us but before giving delivery of shares goes bankrupt. 2. Liquidity risk in the form that the particular scrip might not be traded on exchange. 3. Unsystematic risk in the form that the price of scrip may go up or down due to Company Specific Reasons. 4. Mutual funds may find it difficult to invest the funds raised by them properly as the scrip in which they want to invert might not be available at the right price.

History of derivatives
The history of derivatives is surprisingly longer than what most people think. Some texts even find the existence of the characteristics of derivative contracts in incidents of Mahabharata . Traces of derivative contracts can even be found in incidents that date back to the ages before Jesus Christ However, the advent of modern day derivative contracts is attributed to the need for farmers to protect themselves from any decline in the price of their crops due to delayed monsoon, or overproduction. The first 'futures' contracts can be traced to the Yodoya rice market in Osaka, Japan around 1650. These were evidently standardised contracts, which made them much like today's futures. The Chicago Board of Trade (CBOT), the largest derivative exchange in the world, was established in 1848 where forward contracts on various commodities were standardised around 1865. From then on, futures contracts have remained more or less in the same form, as we know them today. Derivatives have had a long presence in India . The commodity derivative market has been functioning in India since the nineteenth century with organized trading in cotton through the establishment of Cotton Trade Association in 1875. Since then contracts on various other commodities have been introduced as well. Exchange traded financial derivatives were introduced in India in June 2000 at the two major stock exchanges, NSE and BSE. There are various contracts currently traded on these exchanges.

In Feb 2009 the total world derivatives market expanded to $1,000 trillion!!!!
(http://culturechange.org/cms/index.php?option=com_content&task=view&id=329&Itemid=1)

Look at the following chart which was posted in 2007, which shows the growth in derivatives up to that time. The data is from an ISDA market survey and the International Monetary Fund GDP. You can see the explosive growth. Note that there are SIX times the amount of derivatives as the total world GDP. Isn't that a bubble? What will happen when it pops?

I presume the left hand side is Millions of $. From http://www.safehaven.com/article-7104.htm

Two questions come to mind: 1. Why don't the newspapers tell more people about this? (Hardly anyone I speak to knows what about the derivatives market). 2. What will happen when the derivatives bubble bursts (since the derivatives market is largely based on credit)? It will make the stock market crash look like small fry.

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11

Reforms in Indian Capital/Securities Market Advent of Trading In Derivatives in Indian Stock Exchanges
Under the module "Indian Banking Today and Tomorrow" we studied how the series of structural and functional reforms in the banking & financial sector, brought Indian banking & financial Institutions to global standards. Simultaneously far reaching changes have also taken place in the securities/capital markets (primary/secondary markets), resulting in the total integration of the securities market; diversification of the products traded, and providing the investor a risk-free and transparent environment. Like banks, stock exchanges have also been, in the post reform period, freed from the direct control of the Government and placed under a professional regulatory authority, i.e. Securities & Exchange Board of India (SEBI). Major changes that have taken place resulted in the complete transformation of the structure and composition of the market. Some of them are briefly described here-under. Detailed articles can be viewed in the module Indian Stock Exchanges. Establishment of SEBI: The Securities and Exchange Board of India was established by the Government of India in 1988 through an executive resolution, and it was subsequently upgraded as a fully autonomous body (a statutory Board) in the year 1992 with the passing of the Securities and Exchange Board of India Act on 30th January 1992. In place of Government Control, a statutory and autonomous regulatory board with defined responsibilities (covering both development & regulation of the market) and independent powers have been set up. Paradoxically this is a positive outcome of the Securities Scam of 1990-91 (popularly identified as the Harshad Mehta Scam).

The basic objectives of the Board were identified as:

y y y y

to protect the interests of investors in securities; to promote the development of Securities Market; to regulate the securities market and for matters connected therewith or incidental thereto.

Since its inception SEBI has been attending to the fulfillment of its objectives with commendable zeal and dexterity. The improvements in the securities markets like capitalization requirements, margining, establishment of clearing corporations etc. reduced market and credit risks. More details on the performance record SEBI is given in another article. The second epoch-making transformation in the market is the setting up of National Stock Exchange in November 1992 and commencement of electronic networking of stock exchanges with dealing brokers and introduction of on-line screen based trading. NSC is able to radically transform the Indian Capital market during the decade of its existence. It has changed the mindset of all market players and has built investor confidence in the secondary markets. Around the year 1995 all stock exchanges switched over from the open outcry system to screen based online trading. This enabled both NSE and BSE to spread their operations to every nook and corner of the country. Market Integration is uniquely achieved through this measure.
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The next major positive change is the passing of the Depositories Act, 1996 and establishment of National Securities Depository Limited (NSDL) in the same year followed by the setting up of the Central Depository Services Limited (CDSL). A depository is an organization, which holds the shares in the form, of electronic accounts in the same way a bank holds the money. Buying and selling electronic shares in the market is just like selling physical shares, only it's much more simple and safe. Under the Depository System, transfer of ownership of securities is done by book entry similar to a bank deposit account. This has enabled shares and securities to be held electronically instead of in the form of paper-printed documents. This has eliminated several handicaps hither-to felt and provided several benefits likey y y y y y

a safe, convenient way to hold securities; immediate transfer of securities; no stamp duty on transfer of securities; elimination of risks associated with physical certificates such as bad delivery, fake securities, delays, thefts etc.; reduction in paperwork involved in transfer of securities; reduction in transaction cost; no odd lot problem, & even one share can be sold; etc.

SEBI has introduced comprehensive regulatory measures and prescribed registration norms, eligibility criteria, code of obligations and code of conduct for different intermediaries like, bankers to issue, merchant bankers, brokers and sub-brokers, registrars, portfolio managers, credit rating agencies, underwriters etc. It has introduced model bye-laws, risk identification and risk management systems for Clearing houses of stock exchanges, surveillance system etc. that has made dealing in securities both safe and transparent to the end investor. Another significant event worth highlighting is the approval of trading in stock indices (like S&P CNX Nifty & Sensex) by SEBI in the year 2000. A market Index is a convenient and effective product because of the following reasons:
y y y y

It acts as a barometer for market behavior; It is used to benchmark portfolio performance; It is used in derivative instruments like index futures and index options; It can be used for passive fund management as in case of Index Funds.

NSC launched S & P CNX Nifty in April 96. S&P CNX Nifty is a well diversified 50 stock index accounting for 23 sectors of the economy. It is used for a variety of purposes such as benchmarking fund portfolios, index based derivatives and index funds. NSE also introduced in Decr.96 CNX Nifty Junior. The total traded value of all Nifty stocks is approximately 70% of the traded value of all stocks on the NSE BSE introduced Sensex. Sensex index is an indicator of the broad market. For instance, tracking the changes in the Sensex enables one to effectively gauge stock market movements. The BSE 30 Sensex, first compiled in 1986 is a market capitalisation weighted index of 30 Scrips. It represents 30 large well-established and financially sound companies. The Sensex also has the largest social recall attached with it. It was the first index to be launched by any Stock Exchange in India and has acquired a unique place in the collective memory of investors. It facilitates
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investors to relate to the market. The most important advantage is that, as one of the oldest and reliable barometers of the Indian Stock Market, it provides time series data over a fairly long period of time. The Sensex represents a broad spectrum of companies in a variety of industries. It represents 14 major industry groups which are large enough to be used for effective hedging. Given the lower cost structure and the overwhelming popularity of the Sensex. launch of BSESENSEX in 1986 was later followed up in January 1989 by introduction of BSE National Index (Base: 1983-84 = 100). It comprised of 100 stocks listed at five major stock exchanges in India at Mumbai, Calcutta, Delhi, Ahmedabad and Madras. The BSE National Index was renamed as BSE-100 Index from October 14, 1996 and since then it is calculated taking into consideration only the prices of stocks listed at BSE. With a view to provide a better representation of the increased number of companies listed, increased market capitalisation and the new industry groups, the Exchange constructed and launched on 27th May, 1994, two new index series viz., the 'BSE-200' and the 'DOLLEX-200' indices. Since then, BSE has come a long way in attuning itself to the varied needs of investors and market participants. In order to fulfill the need of the market participants for still broader, segment-specific and sector-specific indices, the Exchange has continuously been increasing the range of its indices. The launch of BSE-200 Index in 1994 was followed by the launch of BSE500 Index and 5 sectoral indices in 1999. In 2001, BSE launched the BSE-PSU Index, DOLLEX-30 and the country's first free-float based index - the BSE TECk Index taking the family of BSE Indices to 13.

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Derivatives Trading in Financial Markets

Derivatives were not traded in the financial markets of the world up to the period about three decades back, though Stock Exchanges trading in securities in the cash market came to be in vogue more than a century ago. In India the first Stock Exchange, BSE was established in 1875. But BSE commenced trading in derivatives only from 2001. Even in the international financial/securities market the advent of derivatives as trading products was a concurrent-effect with the process of globalisation and integration of the national economies of the developed countries beginning from the Seventies of the last Century. As volumes traded increased and as competition turned intense, trade & business became more complex in the new environment. The new opportunities were matched by fresh challenges and unpredictable volatility of the trading environment. Corporates for the first time sensed the formidable risks inherent in business transactions and the unpredictability of the markets to which they are exposed. Facing multiple risks the business organisations, were induced to search for new remedies, i.e. risk containment devices/instruments. Derivatives came to be the natural remedy in this context. To quote an international professional authority: "As capital markets become increasingly integrated, shocks transmit easily from one market to another. The proliferation of new instruments with complex features has led to enhanced investment opportunities. One such instrument which has become darling of corporates, banks, institutions alike is 'Derivatives'. To have a touch of the tree top's view, Derivatives transaction is defined as a bilateral contract whose value is derived, from the value of an underlying asset, or reference rate, or index. Derivative transactions have evolved in the past twenty years to cover a broad range of products which include instruments like 'forwards', 'futures', 'options', 'swaps' covering a broad spectrum of underlying assets including exchange rates, interest rates, commodities, and equities." [Extract from newsletter from the Association of Chartered Treasury Managers, December 1528,2000, promoted by the Transworld University, USA] Though recent in origin derivatives instruments issued over the years have grown by leaps and bounds and the total amount issued globally is estimated to approach $80 trillion by the advent of the new millenium. Derivative positions have grown at a compounding rate of 20% since 1990. In India though derivatives were introduced very recently in 2001, the trading turnover has already surpassed that of the equity segment. In NSE alone as per a report on its website the total turnover of the derivatives segment for the month of May 2003 stood at Rs. 53424 crores. During the month of May 2003, the percentage of derivatives segment as a percentage of the cash segment was 97.68%. However in the earlier two months the turnover of Derivatives was higher than that of the cash segment.

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Developments Leading to Trading of Financial Derivatives in the USA "The pace of innovation in derivatives markets increased remarkably in the 1970s.
y

y y

The first major innovation occurred in February 1972, when the Chicago Mercantile Exchange CME began trading futures on currencies in its International Monetary Market (IMM) division. This marked the first time a futures contract was written on anything other than a physical commodity. The second was in April 1973, when the CBT formed the Chicago Board Options Exchange (CBOE) to trade options on common stocks. This marked the first time an option was traded on an exchange. The third major innovation occurred in October 1975, when the CBT introduced the first futures contract on an interest rate instrument - Government National Mortgage Association futures. In January 1976, the CME launched Treasury bill futures and, in August 1977, the CBT launched Treasury bond futures. The 1980s brought yet another round of important innovations. The first was the use of cash settlement. In December 1981, the IMM launched the first cash settlement contracts, the 3-month Eurodollar futures. At expiration, the Eurodollar futures is settled in cash based on the interest rate prevailing for a three-month Eurodollar time deposit . Cash settlement made feasible the introduction of derivatives on stock index futures, the second major innovation of the 1980s. In February 1982, the Kansas City Board of Trade (KCBT) listed futures on the Value Line Composite stock index, and, in April 1982, the CME listed futures on the S&P 500. These contract introductions marked the first time that futures contracts were written on stock indexes. The third major innovation of the 1980s was the introduction of exchange-traded option contracts written on "underlyings" other than individual common stocks. The CBOE and AMEX listed interest rate options in October 1982 and the Philadelphia Stock Exchange (PHLX) listed currency options in December 1982 as also options and gold futures. In January 1983, the CME and the New York Futures Exchange (NYFE) began to list options directly on stock index futures, and, in March 1983, the CBOE began to list options on stock indexes.

These two decades of innovation have transformed the nature of derivatives trading activity on exchanges. While derivatives exchanges were originally developed to help market participants manage the price risk of physical commodities, today's trading activity is focused on hedging the financial risks associated with unanticipated price movements in stocks, bonds, and currencies. The 1980s also saw the re-emergence of OTC derivatives trading. As derivatives on financial assets became increasingly popular, investment banks began to think of new ways to tailor contracts to meet customer needs. Some innovations were minor changes in the standard terms of exchange-traded derivatives contracts on financial instruments (e.g., modifications to the expiration date and/or the contract denomination).

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1. In 1980, for example, the first OTC Treasury bond option was traded. Other contracts were new and seemingly different. They fall under the generic heading of "swaps". A swap contract is a contract to "swap" a series of periodic future cash flows, where the terms of the swap are usually set such that the up-front payment is zero. 2. The first interest rate swap was in 1981, when the Student Loan Marketing Association (i.e., "Sallie Mae") swapped interest payments on intermediate-term fixed rate debt for floating-rate payments indexed to the three-month Treasury bill rate. The cash flows of the two legs of a swap can be linked to virtually any asset or index. 3. A basis rate swap, for example, is an exchange of floating rate payments where the two floating rates are linked to, say, a three-month Treasury bill rate and a three-month Eurodollar time deposit rate. 4. A currency swap is an exchange of interest payments (either fixed or floating) in one currency for payments (either fixed or floating) in another. 5. An equity swap involves the exchange of an interest rate payment and a payment based on the performance of a stock index. 6. an equity basis swap involves an exchange of payments on two different indexes. Swap agreements may appear different from standard forward and option contracts, but they are not. Every swap can be decomposed into a portfolio of forwards and options. The benefit a swap provides is that several transactions are bundled into a single product."

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SECURITIES AND EXCHANGE BOARD OF INDIA (SEBI): SEBI was set up as an autonomous regulatory authority by the Government of India in 1988 " to protect the interests of investors in securities and to promote the development of, and to regulate the securities market and for matters connected therewith or incidental thereto." It is empowered by two acts namely the SEBI Act, 1992 and the securities contract (regulation) Act, 1956 to perform the function of protecting investor's rights and regulating the capital markets. Objectives of SEBI: As an important entity in the market it works with following objectives: It tries to develop the securities market. Promotes Investors Interest. Makes rules and regulations for the securities market.

Functions of SEBI:
1. 2. 3. 4. 5. Regulates Capital Market Checks Trading of securities. Checks the malpractices in securities market. It enhances investor's knowledge on market by providing education.

It regulates the stockbrokers and sub-brokers. 6. To promote research and investigation. 7. Investor education and training of the Intermediaries. 8. Inspection and enquiries.

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NATIONAL STOCK EXCHANGE

The National Stock Exchange (NSE) of India became operational in the capital market November1994 in Mumbai. The genesis of the NSE lies in the recommendations of the pertainscommittee 1991. Apart from the NSE, it had recommended for the establishment of national stockmarket system also. The committee pointed out some major defects in the Indian stock market. TheDefects specified are1. Lack of liquidity in most of the markets in terms of depth and breadth.2. Lack of ability to develop markets for debts.3. Lack of infrastructure facilities and outdated trading system.4. Lack of transparency in the operations that effect investor s confidence.5. Outdated settlement systems that are inadequate to cater to the growing volume, leading todelays.6. Lack of single market due to the inability of various stock exchanges to function cohesively withlegal structure and regulatory framework.These factors led to the establishment of the NSE.

OBJECTIVES:
1)To establish a nationwide trading facility for equities, debt instruments and hybrids, tomeet current international standards of securities market. 2)To ensure equal access to investors all over the country through appropriatecommunication network. 3)To provide a fair, efficient and transparent securities market to investors using anelectronic communication network. 4)To enable shorter settlement cycle and book entry settlement system.

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PROMOTERS:
Industrial Development Bank of India (IDBI) Industrial Credit and Investment Corporation of India (ICICI) Industrial Financing Corporation of India (IFCI) Life Insurance Corporation of India State Bank of India General Insurance Corporation Bank of Baroda Canara Bank Corporation Bank Indian Bank Oriental Bank of Commerce Union Bank of India Punjab National Bank Infrastructure Leasing and Financial Services Stock Holding Corporation of India

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BOMBAY STOCK EXCHANGE This stock exchange, Mumbai, popularly known as "BSE" was established in 1875 as The Native share and stock brokers association", as a voluntary non-profit making association. It has evolved over the years into its present status as the premiere stock exchange in the country. It may be noted that the stock exchanges the oldest one in Asia, even older than the Tokyo Stock exchange which was founded in 1878. The exchange, while providing an efficient and transparent market for trading in securities, upholds the interests of the investors and ensures redressed of their grievances, whether against the companies or its own member brokers. It also strives to educate and enlighten the investors by making available necessary informative inputs and conducting investor education programmes. A governing board comprising of 9 elected directors, 2 SEBI nominees, 7 public representatives and an executive director is the apex body, which decides the policies and regulates the affairs of the exchange.

BSE INDICES: In order to enable the market participants, analysts etc., to track the various ups and downs in the Indian stock market, the Exchange has introduced in 1986 an equity stock index called BSE-SENSEX that subsequently became the barometer of the moments of the share prices in the Indian stock market. It is a "Market capitalization-weighted" index of 30 component stocks representing a sample of large, well-established and leading companies. The base year of Sensex is 1978-79. The Sensex is widely reported in both domestic and international markets through print as well as electronic media. Sensex is calculated using a market capitalization weighted method. As per this methodology, the level of the index reflects the total market value of all 30-component stocks from different industries related to particular base period. The total market value of a company is determined by multiplying the price of its stock by the number of shares outstanding. Statisticians call an index of a set of combined variables (such as price and number of shares) a composite Index. An Indexed number is used to represent the results of this calculation in order to make the value easier to work with and track over a time. It is much easier to graph a chart based on Indexed values than one based on actual values world over majority of the well-known Indices are constructed using Market capitalization weighted method ". In practice, the daily calculation of SENSEX is done by dividing the aggregate market value of the 30 companies in the Index by a number called the Index Divisor. The Divisor is the
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only link to the original base period value of the SENSEX. The Divisor keeps the Index comparable over a period of time and if the reference point for the entire Index maintenance adjustments. SENSEX is widely used to describe the mood in the Indian Stock markets. Base year average is changed as per the formula.

NATIONAL STOCK EXCHANGE The NSE was incorporated in Nov 1992 with an equity capital of Rs. 25 crs. The International securities consultancy (ISC) of Hong Kong has helped in setting up NSE. ISC has prepared the detailed business plans and installation of hardware and software systems. The promotions for NSE were financial institutions, insurances companies, banks and SEBI capital market ltd, Infrastructure leasing and financial services ltd and stock holding corporation ltd. It has been set up to strengthen the move towards professionalization of the capital market as well as provide nationwide securities trading facilities to investors. NSE is a national market for shares PSU bonds, debentures and government securities since infrastructure and trading facilities are provided.

NSE - NIFTY: The NSE on April 22, 1996 launched a new equity Index. The NSE-50. The new Index which replaces the existing NSE-100 Index is expected to serve as an appropriate Index for the new segment of futures and options.Nifty means National Index for Fifty Stocks. The NSE-50 comprises 50 companies that represent 20 broad Industry groups with an aggregate market capitalization of around Rs. 1, 70,000 crores. All companies included in the Index have a market capitalization in excess of Rs 500 crores each and should have traded for 85% of trading days at an impact cost of less than 1.5%. The base period for the index is the close of prices on Nov 3, 1995, which makes one year of completion of operation of NSEs capital market segment. The base value of the Index has been set at 1000.

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List of Stock Exchanges recognized under the securities contract (regulation) Act, 1956
NAME OF THE STOCK EXCHANGE Bombay stock exchange, 1875 YEAR

Ahmadabad share and stock brokers association 1957 Calcutta stock exchange association Ltd, 1957 Delhi stock exchange association Ltd, 1957 Madras stock exchange association Ltd, 1957 Indoor stock brokers association, 1958 Bangalore stock exchange, 1963 Hyderabad stock exchange, 1943 Cochin stock exchange, 1978 Pune stock exchange Ltd, 1982 U.P stock exchange association Ltd, 1982 Ludhiana stock exchange association Ltd, 1983 Jaipur stock exchange Ltd, 1983-84 Gauhathi stock exchange Ltd, 1984 Mangalore stock exchange Ltd, 1985 Maghad stock exchange Ltd, Patna,

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2.2 COMPANY PROFILE

Motilal Oswal Securities Ltd. (MOSL) was founded in 1987 as a small sub-broking unit, with just two people running the show. Focus on customer-first-attitude, ethical and transparent business practices, respect for professionalism, research-based value investing and implementation of cutting-edge technology has enabled us to blossom into an over 1600 member team. Today we are a well diversified financial services firm offering a range of financial products and services such as Wealth Management, Broking & Distribution, Commodity Broking, Portfolio Management Services, Institutional Equities, Private Equity, Investment Banking Services and Principal Strategies. We have a diversified client base that includes retail customers (including High Net worth Individuals), mutual funds, foreign institutional investors, financial institutions and corporate clients. We are headquartered in Mumbai and as of March 31st, 2011, had a network spread over 611 cities and towns comprising 1,644 Business Locations operated by our Business Partners and us. As at March 31st, 2011, we had 709,041 registered customers.

In 2006, the Company placed 9.48% of its equity with two leading private equity investors based out of the US New Vernon Private Equity Limited and Bessemer Venture Partners. The company got listed on BSE and NSE on September 9, 2007. The issue which was priced at Rs.825 per share (face value Rs.5 per share) got a overwhelming response and was subscribed 27.18 times in turbulent market conditions. The issue gave a return of 21% on the date of listing. As of end of financial year 2008, the group networth was Rs.7 bn and market capitalization as of March 31, 2008 was Rs.19 bn. Credit rating agency Crisil has assigned the highest rating of P1+ to the Companys shortterm debt program. Shareholding Pattern at on 31st March, 2011. As of March 31st, 2011; the total shareholding of the Promoter and Promoter Group stood at 69.16%. The shareholding of institutions stood at 12.07% and non-institutions at 18.77%. (click here for detailed shareholding pattern) Research is the solid foundation on which Motilal Oswal Securities advice is based. Almost 10% of revenue is invested on equity research and we hire and train the best resources to become advisors. At present we have a expert team of Research Analysts researching 25+ sectors and commodities. From a fundamental, technical and derivatives research perspective; Motilal Oswal's research reports have received wide coverage in the media (over a 1000 mentions last year). Our consistent efforts towards quality equity research has reflected in an increase in the ratings and rankings across various categories in the AsiaMoney Brokers Poll over the years.
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Milestones
2011:
 Motilal Oswal in association with Zee Business, hosted the first of its series of seminars under its investors education initiative called Investor Ki Kahani Usi Ki Zubani on July 2, 2011 at BSE in Mumbai. The seminar saw a colossal turnout with more than 750 investors attending the session.  Motilal Oswal AMC organized the first edition of Motilal Oswal MOSt Shares ETF Conclave 2011 at NSE, Mumbai on 15th June, 2011. The event was telecast LIVE via webcast and the panel discussion was telecast LIVE by CNBC TV18.  Mr. Raamdeo Agrawal was honoured with an award for Special Contribution to Indian Capital Market by Zee Business at the INDIA S BEST MARKET ANALYST AWARDS 2011 on April 29, 2011.  Our Analysts Mr. Dhirendra Tiwari & Mr. Harshad Borawake won the Best Market Analyst Award for the categories Equity-Sectoral-Infrastructure and Equity Sectoral Energy respectively at INDIA S BEST MARKET ANALYST AWARDS 2011 organised by Zee Business on April 29, 2011.  Motilal Oswal Asset Management Company becomes India s 1st AMC to ring The NASDAQ Stock Market Opening Bell on 30 March 2011, to celebrate the launch of Motilal Oswal MOSt Shares NASDAQ 100 - India s First US Equities Based ETF.  Motilal Oswal MOSt Shares NASDAQ 100 - India s First US Equities Based ETF gets listed on NSE and BSE on 31st March, 2011  Motilal Oswal Securities won 4 awards at the ET Now Starmine Analyst Awards 2010-2011. This puts MOSL amongst the Top 3 Award winning Brokers at the ET NOW Starmine Analyst Awards 2010-2011  Our analyst Mr. Alpesh Mehta was awarded Top Earnings Estimator Overall, at the ET NOW Starmine Analyst Awards 2010. He also received an award for Top Earnings Estimator for Financial Sector along with our analysts Mr. Harshad Borawake being awarded Top Stock Picker for Energy Sector and Mr. Siddharth Bothra being awarded Top Stock Picker for Real Estate Sector.  Motilal Oswal Mutual Fund launches MOSt Shares NASDAQ 100 - India s first US Equities based ETF tracking the NASDAQ-100 Index  Motilal Oswal Mutual Fund s MOSt Shares M50 bagged the Most Innovative Fund of the Year Award at CNBC TV18-CRISIL Mutual Fund Award 2011 held in Mumbai.  Motilal Oswal MOSt Shares Midcap 100 ETF India s First Midcap Index ETF; based on CNX Midcap Index was listed on NSE on February 4, 2011  Motilal Oswal Asset Management launches MOSt Shares M100 ETF - India s First Midcap ETF; based on CNX Midcap Index

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2010:

 The 15th Motilal Oswal Wealth Creation Study presentation was held in Mumbai on 15th December 2010 and was covered live on CNBC TV18  Motilal Oswal Securities bagged the Best Performing Equity Broker (National) Award at CNBC TV18 Financial Advisor Awards 2010 held in Mumbai. CNBC TV18 organised Financial Advisor Awards 2010, in partnership with UTI MF. These awards are authoritative evaluation backed by a robust methodology powered by India s leading rating house, ICRA.  Motilal Oswal Securities entered into a strategic alliance with Barclays Bank, for an equity trading platform for its (Barclays) customers. This alliance provides Barclays customers with the option to invest in equities, derivatives and IPOs, through MOSL.  Motilal Oswal Securities Limited bagged the QualTech Prize for Improvement - 2010 in the Services Category on September 24, 2010. The Award winning project was a DMAIC project done in Account Opening Department to reduce Account Opening Turn around Time.  Ashutosh Maheshvari, CEO, MOIAPL, bagged the India M&A Investment Banker award , and Acquisition of Equipav (Brazil) by Shree Renuka Sugars (India) facilitated by MOIAPL won the ASIA PACIFIC CROSS-BORDER DEAL of the YEAR at the ASIA-PACIFIC M&A ATLAS AWARDS held on September 23, 2010, organized by Global M&A Network.  Motilal Oswal Private Equity organized the First Annual Investor Meet of India Realty Excellence Fund (IREF) on 28th August, 2010 in Mumbai. The event provided a platform for investors to interact with the investment team, MOPE s partner developers and get a flavor of their investment strategy  Motilal Oswal 6th Annual Global Investor conference was held in Mumbai from August, 2010. Around 110 corporates participated in the conference and more than 500 investors attended it  MOSt Shares M50 ETF was listed on NSE on July 30, 2010  MOSt Shares M50 ETF NFO which was open for subscription from June 30, 2010 till July 19, 2010 raised over Rs.235 crores, making it the largest amount raised during the NFO by any equity ETF in the past 5 years (Data source: Value Research Online.com)  Motilal Oswal Asset Management launches its maiden mutual fund offering - MOSt Shares M50  Motilal Oswal Asset Management hosted the 1st Value Investing forum in March 2010 and was covered live on CNBC TV18

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2009:
 Motilal Oswal Financial Services purchased its new corporate office building based in Prabhadevi, the heart of Mumbai city with a planned usable area of over 2,00,000 sq ft  The 14th Motilal Oswal Wealth Creation Study presentation held in Mumbai in December 2009 and was covered live on CNBC TV18  MOSL ranked No. 2 (Best Local brokerage) in the AsiaMoney Brokers Poll 2009 and No. 2 (Best Indian Brokerage House) category by Institutional Investor  Motilal Oswal Private Equity's India Reality Excellence Fund achieved its final closing of INR 1.64 bn  Motilal Oswal Investment Advisors facilitates the first cross border acquisition by an Indian company in the sugar sector in Brazil  Motilal Oswal Securities Ltd. rated as No.1 Broker in ET Now - Starmine Analyst Awards 2009  Motilal Oswal 5th Annual Global Investor Conference was held in Mumbai where around 80 Indian Corporates participated and over 400 investors from all over the world attended  Motilal Oswal Securities Ltd. enters 'Limca Book of Records' for creating India's largest dealing room in Mumbai  MOSL was 'Rated No.1 Best recommendations Mid & Small Caps' and won awards in 3 out of 4 categories at the Starmine India Broker Rankings 2009 from Thomson Reuters

2008:
 MOSL awarded the prestigous Nasscom - CNBC TV 18 IT User Award 2008  MOSL awarded 'The Best Franchisor in Financial Services' by Franchisee World Magazine 2008 for the second consecutive year  MOSL creates one of India's largest Equity Dealing & Advisory rooms, spread over 26,000 sq ft in Malad, Mumbai  Motilal Oswal's India Business Excellence Fund raised USD 125 million, 25% higher than the initial target of USD 100 million  D & B survey rates MOSL as India's top Broking House in terms of total number of trading terminals  MOSL alliance with IDBI Bank to offer Online Trading Services  AsiaMoney Brokers poll 2007 rates Motilal Oswal Securities Ltd. - Best Overall Country Research Local Brokerage

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2007:
 The Strategic partnership between MOSL and SBI - EZtrade - reaches an important milestone i.e. In less than a year it has managed to sign up more than 10,000 customers  Starts Knowledge First campaign  Motilal Oswal was percieved as the most Research driven stock trading player - Starcom Mediavest Survey  Introduces a separate brand for Private Client Group Purple  Motilal Oswal Commodities Broker Pvt Ltd (MOCBPL) bagges Globoil India's prestigious 'Outstanding Commoditiy Broking House 2007' Award  Motilal Oswal Financial Services ltd. gets listed on the BSE & NSE  Mr. Motilal Oswal - Chairman and Managing Director has been appointed as a member of the Managing Committee of Indian Merchant Chambers  Motilal Oswal Financial Services Ltd files RHP with SEBI for an IPO  Motilal Oswal Financial Services Ltd. features as a case study in Harvard Business School  Motilal Oswal Financial Services Ltd ties up with Punjab National Bank to offer online trading to its customers

2006:
 Motilal Oswal Financial Services Ltd ties-up with State Bank of India to offer online trading  Motilal Oswal Financial Services Ltd was declared as the Best Research House forIndian Stocks in 2006 as per AQ Research  Avaya Global ranked MOSL as the second best company in the Financial Sector for customer responsiveness  Asiamoney Brokers poll 2006 rates Motilal Oswal Securities Most Independent Research- Local Brokerage  Introduces unique 1 paisa trading scheme for online Derivatives trading  Launches the India Business Excellence Fund (IBEF), a US$ 100 mn India focused Private Equity Fund  Investment Banking business advises Aban in their majority controlling stake of Sinvest ASA one of the largest investment banking deals of 2006  Places 9.48% with two leading private equity investors - New Vernon Private Equity Limited and Bessemer Venture Partners  Issues about 13% of companies equity to employees as ESOPs  Acquires a leading south Indian brokerage firm - Peninsular Capital Markets. Also acquires 1 more brokerage firms in UP  Enters Private Equity and Investment Banking businesses  Value PMS gives 390% returns to its investors between Feb 2003 and March 2006  Relaunches its e-Broking service through a nationwide campaign. First advice-based online trading proposition in the Indian markets  Another milestone in distribution 1160 Business locations, over 360 cities, serving over 2,00,000 customers

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 Employee base crosses 2000 and Business Associate base crosses 780

Equity

Advisory

Group

In keeping with its tradition of personalized service, Motilal Oswal Securities Limited provides Customized Equity Advisory Group to clients based on their profile. Equity Research is an inherent strength of MOSt. Converting that research to advice is the main function of Equity Advisory. Investors are presented with well researched opportunities in companies which will grow in both market perceived value and growth. Along side, the trading fraternity is catered to with ideas induced by Technical analysis and news flow analysis. The investment ideas identified by the research team are presented and communicated with conviction to our clients by our advisory team. Our advisory team has highly trained equity professionals, who act as your Equity Advisor. MOSt Equity Advisor proactively helps you take informed equity investment decisions and build a healthy portfolio giving the best fit to your investment and trading needs. Centralized Advisory Desk (CAD)

The MOSt Equity Advisory Group is based in Mumbai at largest dealing and advisory floor of India. This centralized advisory team caters to peculiar Investment need of every HNI & MNI client and business partner; in a seamless, speedy and reliable manner using state-of-the-art technology and telecommunication infrastructure. MOSt Equity Advisors are equipped with the knowledge and prudence making sure that every rupee deployed works the hardest it can. Your advisors play the part of a guide ushering you on a swift wealth creation ride. The sheer strength of our advisory creates synergy for seamless flow of Investment support. To improve the overall experience while the clients interact with our advisors, we have implemented a contact centre solution, Drishti, in our dealing room. Among other benefits, this solution helps advisors to manage their client base more efficiently and effectively. The system provides a single number contact to all our clients as well as a single click auto-dial for advisors without having to remember their contact details.

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Motilal Oswal Investment Services offers you a state-of-the-art Online Trading platform that gives

Benefits

of

opening

an

account

with

MOSL:

Wide range of investment choices - Equity, Derivatives, IPOs and Mutual Funds Award winning research trusted by 300+ Institutions & Fund Managers Flexible Online Trading Platform from your Desktop, Web, Mobile or Call N Trade Superior Leverage Products allowing you to trade more on your margin# Discounted Brokerage Schemes that offer you true value for money Better Security with 128-bit Secure Socket Layer encryption Complete ease of operation with 46+ Banks for funds transfer Integrated view of your investments, customised news & alerts, watchlists, etc. through My Motilal Oswal Dedicated customer see team, personal guidance and more

Futures &Options (F&O): Futures & options are derivatives, which use equity as their underlying. Hence our Equity Advisory Group (EAG), will also act as your advisors for F&O & help you take informed decisions while trading in these derivative instruments. Why F&O: Since derivatives instrument provide good leverage opportunity, it is a great tool for speculation. Leverage is a double edge sword for which one requires an equity advisor. Our advisors will also help you with various strategies like Bull Spread, Bear Spread, Cover call writing, hedging strategies etc. This is to help you to make better trading returns. The Equity Advisor doesnt stop at just that, he goes a step further to ensure that your trades are settled and traded with proper margin in your account in a timely manner. This allows us to give you a convenient single window service and your advisor becomes the single point contact for all your equity related matters. You can avail of our services from all our Business locations and through E broking across India, as in equities

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Motilal Oswal Securities added Life Insurance during April 2008 to our Wealth Management Portfolio thereby filling the gap in our basket of the products and thus providing comprehensive financial planning to our clients covering not all wealth creation solutions, but also wealth protection through proper risk management process With complete emphasis on the solution providing, we approach our clients, not merely withinsurance product per se, but with module( life profiler) to help our clients with objective based planning for life, identify and understand the various risk attached to his/her life and later advising you with appropriate customized solution.

MOSL through our insurance partners offers insurance coverage and wealth creationopportunities to meet your different financial goals during the various stages of your life. The plans offer you the control to manage your protection and investment in one account. It is designed to remove your worries and making you secure in the knowledge that you and your loved ones are protected against any untoward events.

Life is about living it to the fullest. About reaching for a higher goal. At different stages of your life you have different goals; whether it is owning the home you've always dreamed of, giving your children the best or just having the financial freedom to enjoy your golden years.

Motilal Oswal Securities Ltd are corporate agents for ICICI Prudential Life Insurance Company Ltd. Corporate agency License no: 4403280

Ever since the dawn of civilization commodities trading have become an integral part in the lives of mankind. The very reason for this lies in the fact that commodities represent the fundamental elements of utility for human beings. Over the years commodities markets have been experiencing tremendous progress, which is evident from the fact that the trade in this segment is standing as the boon for the global economy today. The promising nature of these markets has made them an attractive investment avenue for investors. Earlier investors invested in those companies, which specialized in the production of commodities. This accounted for the indirect investments in commodity assets.

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Book Building means a process undertaken by which a demand for the securities proposed to be issued by a body corporate is elicit and built up and the price of the security is assessed on the basis of the bids obtained for the quantum of securities offered for subscription by the issuer. This method provides an opportunity to the market to discover the price for securities.
y y y

In case of a fixed price issue the issue price is fixed. ONLINE IPO MOSL facilitates the IPO application for all of its clients through online platform. Using the Online IPO service, an existing can apply for the IPO using the weblinkhttps://onlinetrade1.motilaloswal.com/ MODES- Motilal Oswal Depository Services

In the times of T+2 having a de-mat account linked to your trading account becomes really convenient. The non-trading clients can also avail of MODES.
y

Today MODES is available at all business locations of Motilal Oswal. In terms of number of accounts MODES is the second biggest Depository Participant in CDSL with over 150,000 accounts. The trust they have in Motilal Oswal is reflected by their cumulative holding in MODES worth over Rs. 3400 crores.
y

Holder of a MODES account receives regular account reports and an efficient service at all times. Clients having holdings over Rs. 10 lakhs receive special SMS service. They get recommendations on their holdings based on Motilal Oswal Research rated the "Most Independent Research - Local Brokerage" by Asia Money Brokers Poll 2006. Motilal Oswal Investment Advisors Private Limited (MOIAPL) Founded in June 2006, MOIAPL offers comprehensive Investment Banking solutions and transaction expertise covering private placement of equity, debt and convertible instruments covering international & domestic capital markets, mergers & acquisitions advisory and restructuring advisory & implementations. The team comprises of multi-disciplinary professionals with extensive collective banking and corporate finance advisory experience. An in-depth understanding of different sectors within the Investment Banking team underpinned by the two decade old research strength of the group company, Motilal Oswal Securities Limited enables us to provide customized financial solutions to our clients across industries. We display a focused transaction-closure orientation which is facilitated by our cross-product knowledge and the well entrenched relationships that we nurture at the highest levels within the investor community, market intermediaries and the corporate sector. We work in partnership with the management of our clients and commit our resources end-to-end throughout the transaction, ensuring timely execution with minimal disruption

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Easy Derivatives Trading

If you are not averse of taking risks, derivatives can prove to be a good investment option especially with our research. We, at Kotak Securities, have strived to make trading in futures & options simpler. Our derivatives seminars educate new entrants in the stock options & futures trading market to be more equipped with knowledge and techniques. Once you have the knowledge of trading in derivative instruments our daily derivative reports will provide you with strategies that may yield good returns for you. To start trading in derivatives, all you need to do is open an online trading account. Choose from our wide range of accounts to suit your investment needs. If you are an advanced trader in derivatives we have special product for you.

Currency Derivatives "Never keep all your eggs in one basket" - Financial markets are a classic example of this proverb. These markets all around the world in all categories and at all points of time have taught us to keep our investments diversified into various instruments. Hence, we at Kotak Securities have brought a new investment opportunity for all Resident Indians, who can now diversify their portfolio, by trading in Currency Derivatives. Currency derivative is a contract between the seller and buyer, whose value is to be derived from the underlying asset, the currency amount. A derivative based on currency exchange rates is a future contract which stipulates the rate at which a given currency can be exchanged for another currency as at a future date. For the first time this segment is accessible to the retail players in the currency trading market. Further, Kotak Securities clients will enjoy the following major advantages: A) Currency Derivatives (Currency Futures), Equities and Mutual Funds can be traded on one trading platform B) Your Cash margin with Kotak Securities can be used for all the three segments C) Exclusive research reports and seminars for Currency Derivatives Trading

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3. THEORETICAL REVIEW
DERIVATIVES:
The term "Derivative" indicates that it has no independent value, i.e. its value is entirely "derived" from the value of the underlying asset. The underlying asset can be securities, commodities, bullion, currency, live stock or anything else. In other words, Derivative means a forward, future, option or any other hybrid contract of pre determined fixed duration, linked for the purpose of contract fulfillment to the value of a specified real or financial asset or to an index of securities. The Securities Contracts (Regulation) Act 1956 defines derivative as under: "derivative" includes A. a security derived from a debt instrument, share, loan whether secured or unsecured, risk instrument or contract for differences or any other form of security; B. a contract which derives its value from the prices, or index of prices of underlying securities; The above definition conveys 1. That derivatives are financial products 2. Derivative is derived from another financial instrument/contract called the underlying. In the case of Nifty futures, Nifty index is the underlying. 3. A derivative derives its value from the underlying assets

Why Derivative
Derivatives are used 1. By Hedgers for protecting (risk-covering) against adverse movement. Hedging is a mechanism to reduce price risk inherent in open positions. Derivatives are widely used for hedging. A Hedge can help lock in existing profits. Its purpose is to reduce the volatility of a portfolio, by reducing the risk. 2. Speculators to make quick fortune by anticipating/forecasting future market movements. Hedgers wish to eliminate or reduce the price risk to which they are already exposed. Speculators, on the other hand are those class of investors who willingly take price risks to profit from price changes in the underlying. While the need to provide hedging avenues by means of derivative instruments is laudable, it calls for the existence of speculative traders to play the role of counter-party to the hedgers. It is for this reason that the role of speculators gains prominence in a derivatives market.

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3. Arbitrageurs to earn risk-free profits by exploiting market imperfections. Arbitrageurs profit from price differential existing in two markets by simultaneously operating in the two different markets. BSE Website has summarised the following benefits justifying derivatives trading"There are several risks inherent in financial transactions. Derivatives allow you to manage these risks more efficiently by unbundling the risks and allowing either hedging or taking only one (or more if desired) risk at a time. For instance, if we buy a share of TISCO from our broker, we take following risks. 1. "Price risk that TISCO may go up or down due to company specific reasons (unsystematic risk). 2. "Price risk that TISCO may go up or down due to reasons affecting the sentiments of the whole market (systematic risk). 3. "Liquidity risk, if our position is very large, that we may not be able to cover our position at the prevailing price (called impact cost). 4. "Counterparty (credit) risk on the broker in case he takes money from us but before giving delivery of shares goes bankrupt. 5. "Counterparty (credit) risk on the exchange - in case of default of the broker, we may get partial or full compensation from the exchange. 6. "Cash out-flow risk that we may not able to arrange the full settlement value at the time of delivery, resulting in default, auction and subsequent losses. 7. "Operating risks like errors, omissions, loss of important documents, frauds, forgeries, delays in settlement, loss of dividends & other corporate actions etc." "Once we are long on TISCO we can hedge the systematic risk by going short on index futures. On the other hand, if we do not want to take unsystematic risk on any one share, but wish to take only systematic risk - we can go long on index futures, without buying any individual share. The credit risk, cash outflow risk and operating risks are much easier to manage in this case."

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. Trading

in Derivatives

Indian securities markets have indeed waited for too long for derivatives trading to emerge. utual Funds, FIIs and other investors who are deprived of hedging opportunities will now have a derivatives market to bank on. First to emerge are the globally popular variety - index futures. While derivatives markets flourished in the developed world Indian markets remain deprived of financial derivatives to the beginning of this millenium. While the rest of the world progressed by leaps and bounds on the derivatives front, Indian market lagged behind. Having emerged in the markets of the developed nations in the 1970s, derivatives markets grew from strength to strength. The trading volumes nearly doubled in every three years making it a trillion-dollar business. They became so ubiquitous that, now, one cannot think of the existence of financial markets without derivatives. Two broad approaches of SEBI is to integrate the securities market at the national level, and also to diversify the trading products, so that more number of traders including banks, financial institutions, insurance companies, mutual funds, primary dealers etc. choose to transact through the Exchanges. In this context the introduction of derivatives trading through Indian Stock Exchanges permitted by SEBI in 2000 AD is a real landmark. SEBI first appointed the L.C.Gupta Committee in 1998 to recommend the regulatory framework for derivatives trading and to recommend a suggestive bye-laws for Regulation and Control of Trading and Settlement of Derivatives Contracts. The Board of SEBI in its meeting held on May 11, 1998 accepted the recommendations of the Dr. L.C. Gupta Committee and approved the phased introduction of derivatives trading in India beginning with Stock Index Futures. The Board also approved the "Suggestive Bye-laws" recommended by the committee for Regulation and Control of Trading and Settlement of Derivatives Contracts. SEBI subsequently appointed the J.R.Verma Committee to recommend Risk Containment Measures in the Indian Stock Index Futures Market. The report was submitted in the same year(1998) in the month of November by the said committee. However the Securities Contracts (Regulation) Act, 1956 (SCRA) needed amendment to include "derivatives" in the definition of securities to enable SEBI to introduce trading in derivatives. The necessary amendment was carried out by the Government in the year 1999. The Securities Laws (Amendment) Bill, 1999 was introduced to bring about the much needed changes. In December 1999 the new framework has been approved. Derivatives have been accorded the status of `Securities'. The ban imposed on trading in derivatives way back in 1969 under a notification issued by the Central Government has been revoked. Thereafter SEBI formulated the necessary regulations/bye-laws and intimated the Stock Exchanges in the year 2000, while derivative trading started in India at NSE in the same year and BSE started trading in the year 2001. In this module we are covering the different types of derivative products and their features, that are traded in the stock exchanges in India.

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Derivative Markets Today

y y y y

y y

The prohibition on options in SCRA was removed in 1995. Foreign currency options in currency pairs other than Rupee were the first options permitted by RBI. The Reserve Bank of India has permitted options, interest rate swaps, currency swaps and other risk reductions OTC derivative products. Besides the Forward market in currencies has been a vibrant market in India for several decades. In addition the Forward Markets Commission has allowed the setting up of commodities futures exchanges. Today we have 18 commodities exchanges most of which trade futures e.g. The Indian Pepper and Spice Traders Association (IPSTA) and the Coffee Owners Futures Exchange of India (COFEI). In 2000 an amendment to the SCRA expanded the definition of securities to included Derivatives thereby enabling stock exchanges to trade derivative products. The year 2000 heralded the introduction of exchange traded equity derivative products

Equity Derivatives Exchanges in India

y

y y y y y

In the equity markets both the National Stock Exchange of India Ltd. (NSE) and The Stock Exchange, Mumbai (BSE) were quick to apply to SEBI for setting up their derivatives segments. NSE as stated earlier commenced derivatives trading in the same year i.e. 2000 AD, while BSE followed after a few months in 2001. Both the exchanges have set-up an in-house segment instead of setting up a separate exchange for derivatives. NSE's Futures & Options Segment was launched with Nifty futures as the first product. BSE's Derivatives Segment, started with Sensex futures as it's first product. Stock options and stock futures were introduced in both the Exchanges in the year 2001

Thus started trading in Derivatives in Indian Stock Exchanges (both BSE & NSE) covering Index Options, Index Futures, Stock Options & Futures at in the wake of the new millennium. In a short span of three years the volume traded in the derivative market has outstripped the turnover of the cash market The arrival of this new financial product in the securities markets of India, should now interest us to learn more about the origin and development of the global market in derivatives trading of financial securities. This is equally of a recent origin since 1070s

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Classification of Derivatives
The derivatives can be classified as
y

Forwards (Currencies, Stocks, Swaps etc),

Forward contract is different from a spot transaction, where payment of price and delivery of commodity concurrently take place immediately the transaction is settled. In a forward contract the sale/purchase transaction of an asset is settled including the price payable, not for delivery/settlement at spot, but at a specified future date. India has a strong dollar-rupee forward market with contracts being traded for one, two, .. six month expiration. Daily trading volume on this forward market is around $500 million a day. Indian users of hedging services are also allowed to buy derivatives involving other currencies on foreign markets.

Futures (Currencies, Stocks, Indexes, Commodities etc)

A futures contract has been defined as "a standardized, exchange-traded agreement specifying a quantity and price of a particular type of commodity (soybeans, gold, oil, etc.) to be purchased or sold at a pre-determined date in the future. On contract date, delivery and physical possession take place unless the contract has been closed out. Futures are also available on various financial products and indexes today. A futures contract is thus a forward contract, which trades on an exchange. S&P CNX Nifty futures are traded on National Stock Exchange. This provides them transparency, liquidity, anonymity of trades, and also eliminates the counter party risks due to the guarantee provided by National Securities Clearing Corporation Limited.

Options (Currencies, Stocks, Indexes etc).

Options are the standardized financial contracts that allows the buyer (holder) of the options, i.e. the right at the cost of option premium, not the obligation, to buy (call options) or sell (put options) a specified asset at a set price on or before a specified date through exchanges under stringent financial security against default.

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REQUIREMENTS FOR SETTING UP FUTURE AND OPTION TRADING

ARE OUTLINES BELOW: 1. Creation of an Options Clearing Corporation (OCC) as the single guarantor of every traded option. In case of default by a party to a contract, the clearing house has to bear the cost of necessary to carry out the contract.

2. Creation of a strong cash market (secondary market). This is because after the exercise of an option contract, the investors move to the secondary market to book profits.

3. Creation of paper-less trading and book-entry transfer system.

4. Careful selection of the regulation in all the stock exchanges.

5. Uniformity of rules and regulation in all the stock exchanges.

6. Standardization of the terms governing the options contracts. This would decrease the transaction costs. For a given underlying security, all contracts on the options exchange should have an expiry date, a strike price, and a contract price, only the premium should be negotiated on the floor of the exchange . 7. Large, financially sound institutions, members and number of market makers, who can write the options contracts. Strict capital adequacy norms to be out and followed.

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INDIAN CAPITAL MARKET FOR INTRODUCTION OF DERIVATIVES

1. Large Market Capitalization: India is one of the largest market capitalized country in Asia with a market capitalization of more than 7,65,000 crores.

2. High Liquidity: In the underlying securities the daily average traded volume in Indian capital market today is around 7,500 crores. Which means on an average every month 14% of the country market capitalization gets traded, shows high liquidity.

3. Trader Guarantee: The first clearing corporation (CC) guaranteeing trades has become fully functional from July 1996 in the form of National Securities Clearing Corporation (NSCCL) for which it does the clearing.

4. Strong depository : A strong depository National Securities Depositories Ltd. (NSDL), which started functioning in the year 1997, has strengthen the securities settlement in our country.

5. A good Legal Guardian : SEBI is acting as a good legal guardian for Indian Capital Market.

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IMPORTANCE OF DERIVATIVES TRADING

1. Reduction of borrowing cost. 2. Enhancing the yield on assets. 3. Modifying the payment structure of assets to correspond to investor market view. 4. No physical delivery of share certificate so reduction in cost by stamp duty. 5. Increase in hedger, speculator and arbitrageurs. 6. It does not totally eliminate speculation, which is basic need of Indian investors.

DERIVATIVES TRADING IN INDIA

The first step towards introduction of derivatives trading in India was the promulgation of the securities laws (amendment) ordinance, 1995 which withdrew the prohibition on options in securities. The market for derivatives, however, did not take off, as there was no regulatory framework to govern trading of derivatives.SEBI set up a 24 members committee under the Chairmanship of Dr. L.C. Gupta on 18th November, 1996 top develop appropriate regulatory framework for derivatives trading in India. The committee submitted its report on 17th March, 1998 prescribing necessary pre-conditions for introduction of derivatives trading in India. The committee recommended that derivatives should be declared as securities so that regulatory framework applicable to trading of securities could also govern trading of securities. SEBI also set up a group in June 1998 under the Chairmanship of Prof. J.R. Varma, to recommend measures for risk containment in derivatives market in India. The report, which was submitted in October, 1998, worked out the operational details of margining system, methodology for changing initial margins, broker net worth, deposit requirement and real time monitoring requirements. The SCRA was amended in Dec, 1999 to include derivatives within the ambit of securities and the regulatory framework was developed for governing derivatives trading.

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DATA ANALYSIS AND INTERPRETATION

ANALYSIS ON MAY 28TH

Nifty spot closed at 5476 this week, against a close of 5486 last week. The Put-Call Ratio is 1.24 and the annualized Cost of Carry is negative 1.91%. The Open Interest of Nifty Futures decreased by 27.37%, due to expiry.

Put-Call Ratio Analysis The PCR-OI is 1.24 points. In June series, option data is very scattered and spread in a wide range. The 5000 put option and 5800 call option have highest open interest and we are in between of this range. Although the market has given a positive move in start of the series, we don't expect significant positive move. We expect some correction in the market from its immediate resistance levels of around 5550.

Historical Volatility ANALYSIS Historical Volatility of Nifty futures has decreased from 21.55% to 21.44%. IV of at-the-money options decreased from 16.50 to 16.00%. Over the week, few liquid counters where HV has increased significantly are BHEL, SINTEX, AUROPHARMA,BHARATFORG and KSOILS. Stocks where HV has decreased significantly are ULTRACOMCO, BATAINDIA, RANBAXY,SIEMENS and VOLTAS.

Open Interest Analysis Total open interest of market has decreased from `150,031cr to `102,422cr. Stock futures open interest has decreased from `35,836cr to `29,472cr. Banking stocks and Index had significant short positions and most of them got rollover. Few liquid stocks apart from banking where rollover is high are IOC, RENUKA, RELINFRA, BAJAJ-AUTO and IBREALEST. Stocks where rollover is less are PFC, WIPRO, ASHOKLEY, STER and PETRONET.

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Cost-of-Carry Analysis Nifty June Futures closed at a discount of 9.75 points against a premium of 4.95 points last week. The next month's future closed at par of the nifty spot. Few liquid stocks where CoC is positive are DCHL, GTLINFRA, STRTECH, NCC and KSOILS. Stocks where CoC is negative are PNB, ANDHRABANK, ORIENTBANK, INDIANB, and BAJAJ-AUTO.

ANALYSIS ON JUNE 4th

Support of 5400 will be challenged in this week Nifty spot closed at 5517 this week, against a close of 5476 last week. The Put-Call Ratio is 1.31 against 1.24 last week and the annualized Cost of Carry is positive 1.65%. The Open Interest of Nifty Futures increased by 17.24%.

Put-Call Ratio Analysis The PCR-OI increased to 1.31 points from 1.24 points last week.Over the week, significant build up was observed in most of the Put options, while the 5600 to 5800 Call options also added a considerable open interest. Market was trading in a positive territory but was finding resistance around 5600 levels. Many mid-cap counters were out performing in the market. We expect some correction in the market in coming trading sessions though it may not be very steep.

HISTORICAL VOLATILITY ANALYSIS The Historical Volatility of Nifty futures has decreased from 21.44% to 20.18%. IV of at-themoney options decreased from 16.00 to 15.70%. Over the week, few liquid counters where HV has increased significantly are SUNTV, PUNJLLOYD, DABUR, FSL and NATIONALUM. Stocks where HV has decreased significantly are HEROHONDA, HCLTECH, BAJAJHLDNG, PRAJIND and GTLINFRA.

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Open Interest Analysis Total open interest of market increased from `102,422cr to `120,301cr. Stock futures open interest has increased from `29,472cr to `32,254cr. Few liquid stocks where open interest has increased significantly are SUNTV, MUNDRAPORT, PETRONET, BATAINDIA and DABUR. Stocks where open interest has decreased significantly are SBIN, RECLTD, AXISBANK,DIVISLAB and BOMDYEING. Cost-of-Carry Analysis Nifty June Futures closed at a premium of 6.75 points against a discount of 9.75 points last week. The July future closed at a premium of 17.25 points. Few liquid stocks where CoC turned from negative to positive are ONGC, MUNDRAPORT, IDFC,KOTAKBANK and SAIL. Stocks where CoC turned from positive to negative are TRIVENI, DLF, PIRHEALTH and TITAN.

ANALYSIS ON JUNE 18th

Market may correct further buy it won't be one way Nifty spot closed at 5366 this week, against a close of 5585 last week. The Put-Call Ratio is 1.09 against 1.23 last week and the annualized Cost of Carry is positive 7.17%. The Open Interest of Nifty Futures increased by 5.28%. Put-Call Ratio Analysis The PCR-OI decreased from 1.23 to 1.09 points. Over the week,huge build up was observed from 5400 to 5600 call options and considerable unwinding was observed from 5400 to 5600 put options. However, the build up, which took place from 5100 to 5300 put options are blend of buying and selling. Over all,the data suggests further weakness in the market. The selling pace of FIIs in cash segment has also increased.

Historical Volatility Analysis The Historical Volatility of Nifty futures has decreased from 17.91% to 17.32%. Implied volatility of at-the-money options has increased from 16.00% to 18.00%. Over the week, few liquid counters where HV has increased significantly are MAX,WIPRO, PFC, CENTURYTEX and ADANIENT. Stocks where HV has decreased significantly are DCHL, BANKBARODA, NCC,HEROHONDA and TTML.
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Open interest analysis Total open interest of market increased from `127,063cr to `138,292cr. Stock futures open interest has increased from `33,140cr to `34,835cr. Few liquid stocks where open interest has increased significantly are IDFC, ESCORTS, BATAINDIA,HINDALCO and RELIANCE. Stocks where open interest has decreased significantly are TV-.18, DENABANK, PETRONET, RELINFRA and DIVISLAB.

Cost of carry analysis Nifty June Futures closed at a premium of 13.70 points against a discount of 1.65 points last week. The July future closed at a premium of 28.40 points. Few liquid stocks where CoC turned from negative to positive are SREINFRA, GAIL, GRASIM, CANBK and TATAPOWER. Stocks where CoC turned from positive to negative are INDIANB, HEROHONDA, KSOILS, JINDALSAW and RELINFRA. Few stocks which are trading at a discount due to dividend are BAJAJ-AUTO, BANKBARODA, HDFC, SESAGOA and DRREDDY.

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NIFTY MOVES

Date Jun 24, 2011 Jun 23, 2011 Jun 22, 2011 Jun 21, 2011 Jun 20, 2011 Jun 17, 2011 Jun 16, 2011 Jun 15, 2011 Jun 14, 2011 Jun 13, 2011 Jun 10, 2011 Jun 9, 2011 Jun 8, 2011 Jun 7, 2011 Jun 6, 2011 Jun 3, 2011 Jun 2, 2011 Jun 1, 2011 May 31, 2011 May 30, 2011 May 27, 2011 May 26, 2011 May 25, 2011 May 24, 2011 May 23, 2011 May 20, 2011 May 19, 2011 May 18, 2011 May 17, 2011 May 16, 2011

Open 5,343.40 5,269.10 5,304.65 5,280.80 5,372.20 5,412.50 5,419.65 5,494.45 5,485.60 5,469.85 5,518.05 5,523.55 5,535.25 5,509.15 5,504.30 5,565.70 5,529.90 5,561.05 5,492.00 5,493.75 5,413.70 5,372.75 5,389.10 5,385.10 5,456.70 5,450.65 5,448.15 5,448.20 5,496.10 5,541.70

High 5,477.85 5,330.60 5,310.50 5,322.45 5,377.40 5,421.15 5,447.50 5,499.35 5,520.15 5,496.70 5,521.45 5,540.10 5,556.60 5,570.10 5,542.65 5,604.95 5,568.20 5,597.35 5,571.60 5,509.30 5,485.80 5,422.20 5,389.10 5,422.60 5,456.70 5,517.55 5,452.60 5,460.50 5,523.85 5,541.80

Low 5,343.40 5,252.25 5,262.50 5,257.00 5,195.90 5,355.85 5,389.80 5,438.95 5,484.20 5,436.95 5,457.45 5,502.05 5,514.90 5,507.80 5,479.85 5,507.20 5,521.95 5,559.45 5,489.70 5,458.60 5,413.60 5,356.35 5,328.70 5,367.45 5,373.00 5,432.75 5,411.25 5,401.25 5,421.05 5,487.65

Close 5,471.25 5,320.00 5,278.30 5,275.85 5,257.90 5,366.40 5,396.75 5,447.50 5,500.50 5,482.80 5,485.80 5,521.05 5,526.85 5,556.15 5,532.05 5,516.75 5,550.35 5,592.00 5,560.15 5,473.10 5,476.10 5,412.35 5,348.95 5,394.85 5,386.55 5,486.35 5,428.10 5,420.60 5,438.95 5,499.00

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ITC MOVEMENTS IN 40 DAYS

ITC LTD

Date Jun 24, 2011 Jun 23, 2011 Jun 22, 2011 Jun 21, 2011 Jun 20, 2011 Jun 17, 2011 Jun 16, 2011 Jun 15, 2011 Jun 14, 2011 Jun 13, 2011 Jun 10, 2011 Jun 9, 2011 Jun 8, 2011 Jun 7, 2011 Jun 6, 2011 Jun 3, 2011 Jun 2, 2011 Jun 1, 2011 May 31, 2011 May 30, 2011 May 27, 2011 May 26, 2011 May 25, 2011 May 24, 2011 May 23, 2011 May 20, 2011 May 19, 2011 May 18, 2011 May 17, 2011 May 16, 2011

Open 191.75 185.60 185.40 187.50 192.90 194.10 194.50 193.95 190.90 191.30 191.50 194.50 193.50 192.00 193.50 195.30 192.75 195.00 188.00 188.95 187.50 189.00 186.65 190.65 186.95 190.45 190.10 187.80 186.50 190.00

High 196.50 191.75 186.75 188.90 192.90 195.80 195.30 195.15 194.40 192.35 193.30 195.75 196.35 194.40 194.50 196.95 197.90 195.00 193.85 189.60 189.80 189.00 189.75 190.90 190.70 191.50 191.80 190.60 190.00 190.70

Low 191.75 184.35 182.00 184.25 184.30 191.30 193.00 193.05 190.90 189.95 190.50 193.25 193.00 191.50 191.25 193.00 192.40 192.50 188.00 186.35 187.35 186.00 185.35 186.20 186.20 183.75 188.15 187.80 185.70 185.55

Close 195.00 191.60 185.00 185.45 186.70 191.50 194.20 194.40 193.85 191.00 191.55 195.00 195.30 193.90 192.80 193.85 195.40 194.05 193.00 187.30 189.30 187.10 188.60 186.75 190.00 186.70 189.25 189.00 187.85 186.00

Volume 11,121,836 7,714,517 5,940,702 4,537,795 8,151,059 4,918,104 4,458,012 5,411,253 4,116,388 4,070,609 8,849,905 3,919,661 6,050,391 2,116,797 2,928,508 3,850,157 7,064,837 5,582,213 9,111,688 5,949,820 6,093,051 9,888,954 6,440,432 5,954,668 9,143,101 26,209,592 7,886,646 4,518,100 5,823,047 7,697,214
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48

4. FINDINGS
Brokers not dealing in derivatives at present are also not going to adopt it in futures. Hedging and Risk Management is the most important feature of derivatives? It is not for small investors. It ahs increased brokers turnovers as well as helpful in aggregate investment. Brokers havent adequate knowledge about options, so most of them are dealing in futures only. There is a risk factor in derivative also. Most of the investors are not investing in derivatives. People are not aware of derivatives, even people who have invested in it, has not adequate knowledge about it. These people are interested to take it in their future portfolio also. They consider it as a tool of risk management. They normally invest in future contracts. They are investing in future contract, because futures have up to some extent quality at Badla.

y y y y y y y y y y y

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SUGGESTIONS
LOT SIZE Lot size should be reduced so that the major segment of an Indiansociety i.e. small saving class can come under F & O trading. There is strongneed for revision of lot sizes as the lot sizes of some of the individual scrips thatwere worth of Rs. 200000 in starting, now same lot size amount to a much largervalue.

SUB BROKERS Sub-broker concept should be added and the actual brokers shouldgive all rights of brokers in F & O segment also.

SCRIPS More scrips of reputed companies etc. should be introduced inF & O Segment.

TRADING PERIOD Trading period should be increased.

TRAINING CLASSES OR SEMINARS There should be proper classes on derivatives for investors,traders, brokers, students and employees of stock exchanges. Because lack of knowledge is the main reason of its less development. The first step towards it should be seminars provided to brokers and LSE employees and secondly seminar to students.

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CONCLUSION

On the basis of overall study on derivatives it was found thatderivative products initially emerged as hedging devices against fluctuation andcommodity prices and commodity linked derivatives remained the soul form ofsuch products. The financial derivatives came in spotlight in 1972 due o growinginstability in financial market. I was really surprised to see during my study that a layman or asimple investor does not even know how to hedge and how to reduce risk on hisportfolios. All these activities are generally performed by big individual investors,mutual funds etc. No doubt that derivative growth towards the progress of economy ispositive. But the problem confronting the derivative market segment are giving ita low customer base. The main problem that it confronts are unawareness andbit lot sizes etc. these problems could be overcome easily by revising lot sizesand also there should be seminar and general discussions on derivatives at varied places.

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QUESTIONNAIRE
Dear Respondent, I am a student of MBA . I am working on the project STUDY OF DERIVATIVES . You are requested to fill in the questionnaire to enable, toundertake the study on the said project NAME: OCCUPATION: ADDRESS: PHONE NO: 1) For how long you have been trading on derivatives? a) Less than 1 year b) 1 Year c) 2 Year d) 3 year e) More than 3 year. 2) What is your purpose for trading in derivatives? a) Hedging b) Speculation c) Risk Management d) Liquidity 3) . In which segment you have larger turnover ? (BROKERS ONLY) a ) Capital Market Segment b) F & O Segment. c) Equal in both above d) Cant Say. 4) What is amount of money you are investing in normally? a) 2, 00,000 b) 2, 00,000 to Rs. 5, 00,000 c) Rs. 5, 00,000 to Rs. 10, 00,000 d) Any other amount______________ 5) How often do you trade? a) Weekly b) Monthly c) More than 1 month d) More than 2 month What suggestions do you want to make with regard to investors education in derivatives market in India? _____________________________________________________________ _____________________________________________________________

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BIBLIOGRAPHY
BOOKS: NCFM on derivatives core modules by NSEIL. H.S.SIDHU Indian Capital Market 1996, 1st Edition The Indian Commodity-Derivatives Market in Operations. Indian Securities Market A Review. MAGAZINES & NEWSPAPER: NSE News. ECONOMICS TIME INTERNET SITES: www.nseindia.com - historical data business growth. www.bseindia.com www.derivativesindia.com Derivatives in India: Frequently Asked Questions, http://www.mayin.org/ajayshah/PDFDOCS/ShahThomas2000_dfq. pdf

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