Policy Framework for Regulation of Financial Instruments – An Analysis with Special Emphasis to Financial Derivatives

Financial Derivatives have established themselves as a major driving force in the international monetary sphere in the recent past. Financial Derivatives were originally used as an effective monetary instrument to multiply the wealth through ripple effect, of late, these instruments are also used by banks and financial institutions to mitigate risk arising from the volatility of the underlying asset. This apart, derivatives along with the new generation monetary instruments such as investment securities in bearer form have already become the back bone of international economy. This paper attempts to study the policy frame work for regulation of financial derivatives