Question

Discuss

- the evolution of the world's derivative markets and

-possible reasons why derivative markets were introduced relatively late in Turkey

Limit your discussion to a maximum of 400 words.

Answer 1

Derivative markets are an embedded element of the stock market and they are providing with the opportunities of hedging and speculation with the future movements of various securities in-form of hybrid instruments and they will be helping various investors to speculate with a lower cost so this derivative markets have been important in order to maintain a high degree of transparency in the market and it has led to to increased participation and reduced cost of transactions so these derivatives market have been an important part of the overall equity markets.

Derivatives market will be including various types of hybrid instruments like futures as well as options and swaps along with swaptions and they will be trying to provide the investors a better opportunity of making higher rate of return on their overall investment because they will be offering them with a higher degree of transparency and flexibility so that they can manage their exposures into the share market in a better way so these markets have to be properly handled in order to help themselves to hedged in an appropriate manner along with speculate for the future.

Derivatives markets in Turkey have been introduced late due to their high degree of volatility and the risk which have been involved with the derivatives market of increased market participations and there will be a high degree of volatility and risk of foreign control also so these markets have avoided adopting derivatives at their first place because they were very fearful of the foreign control and they were not ready to expose to that much of volatility and they also feel that their derivatives were subject to speculations and they can be leading to wild wings in the market so derivatives have been introduced late in Turkey.