Page 65 - MA - May 2017

Kinds of derivative To manage To manage interest To manage To manage equity
instruments currency exposure rate exposure commodity exposure market exposure
Exchange-traded 32(46.37%) 39(56.52%) 49(71.1%) 6(8.69)
futures

OTC options 37(53.62%) 19(27.53%) 12(17.39%) 1(1.44%)
Exchange-traded 34(49.27%) 22(31.88%) 17(24.63%) 3(4.34%)
options
Swaps 38(55.07%) 42(60.86%) 4(5.79%) 2(2.89%)

The table-1 along with figure-1 commodity price exposures market exposures at 49.27%, 31.88% and
explain about the responses we have related risks. Similarly, the maximum 24.63% respectively according to the
got regarding kinds of derivatives use (71.1%) of exchange traded data. In regard to swaps, responses
companies are using to manage future is for commodity derivatives. say that its highest use (60.86%) is
your exposures to financial risks. The Also, exchange traded futures for hedging interest rate exposures.
table clearly shows that according to are used for currency exposures Next best use (55.07%) of swap is
the respondents, Indian companies (46.37%) and for interest rate for managing currency exposures.
are highly using the OTC forward exposures (56.52%). In the same But swap is not so popular to be
contracts to hedge risks. Typically, line, 53.62% of the respondents used against commodity risks and
companies use OTC contracts to opine that Indian companies use financial market risk. The overall
hedge currency exposures, interest OTC options for currency exposures. responses say that all derivative
rate exposures. As per the data, 62 27.53% and 17.39% of respondents contracts are normally used for
out of 69 respondents (89.85%), say that OTC options are used currency exposures and interest rate
the Indian companies are using for interest rate and commodity exposures. Very nominal proportion
OTC forwards for hedging against exposures respectively. Exchange of responses says that equity market
exchange related risks. OTC contracts traded options are used for currency, exposures are hedged by derivative
are not so widely used for managing interest rate and commodity contracts.

Figure-1: Types Derivative Instruments Used for Managing Financial Risks

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