Single Stock Futures: We are No. 1
A recent Bloomberg article highlights the continued dominance of India in the share of world-wide single stock futures (SSF) markets. And SSFs were introduced here just 5 years ago! Here’s a couple of charts from the latest NSE newsletter that depict the bull market in SSFs:
What’s even more interesting is that Mr. R. H. Patil, who was instrumental in setting up the NSE, has concerns about this rapid growth in SSFs:
* A group of large speculators can come together and manipulate the futures prices of an individual stock in a concerted fashion.
* A conventional array of equity derivatives - stock options and index futures and options - can make SSFs redundant because the latter don’t have a unique justifiable purpose.
The Upside: Retail investors can speculate on individual stocks with 6:1 leverage and “short sell” stocks effectively, with no counter-party risk!
Related Posts: