As the name suggests, derivative is a financial instrument that offers a return based on the return of some other

underlying asset. In this sense, its return is derived from another instrument.

The definition states, a derivative's performance is based on the performance of an underlying asset. This underlying

asset is often referred to simply as the underlying. It trades in a market in which buyers and sellers meet and decide

on a price; the seller then delivers the asset to the buyer and receives payment. The price for immediate purchase of

the underlying asset is called the cash price or spot price.

A derivative also has a defined and limited life: A derivative contract initiates on a certain date and terminates on a

later date. Often the derivative's payoff is determined and/or made on the expiration date, although that is not always

the case. In accordance with the usual rules of law, a derivative contract is an agreement between two parties in

which each does something for the other. In other words, no money need change hands up front.
Types of Derivatives
42
•

Over-the-counter (OTC) derivatives are contracts that are traded

(and privately negotiated) directly between two parties, without going
through an exchange or other intermediary. Products such assw aps,
forward rate agreements, and exotic options are almost always

traded in this way. The OTC derivatives market is huge. According to the Bank for International Settlements, the

total outstanding notional amount is USD 298 trillion (as of 2005).

•

Exchange-traded derivatives are those derivatives products that are

traded via specialized Derivatives exchanges or other exchanges. A derivatives exchange acts as an intermediary to

all related transactions, and takes Initial margin from both sides of the trade to act as a guarantee.
There are 3 kinds of Derivative contracts:
•

Futures Contract
•

Forward Contract
•

Options Contract
SERVICES
43
KSBL (KARVY STOCKBROKING LIMITED), offer services that are beyond just a medium for buying and selling

stocks and shares. Instead KSBL provide services which are multi dimensional and multi-focused in their scope.

There are several advantages in utilizing Karvy’s Stock Broking services, which are the reasons why it is one of the

best in the country.

Its highly skilled research team, comprising of technical analysts as well as fundamental specialists, secure result-

oriented information on market trends, market analysis and market predictions. Crucial information regarding

customer individual account balances are given as a constant feedback to them, through daily reports delivered

thrice in a day.
 The Pre-session Report, where market scenario for the day is
predicted.
 The Mid-session Report, timed to arrive during lunch break, where
the market forecast for the rest of the day is given.
 The Post-session Report, the final report for the day, where the
market and the report itself is reviewed.

In addition, the specific industry reports prepared by Karvy Stockbroking Limited give comprehensive information

on various industries. They also offer special portfolio analysis packages that provide daily technical advice on

scrips for successful portfolio management and provide customized advisory services to help investors make the

right financial moves that are specifically suited to their portfolio.

These services have increasingly offered customer oriented convenience, which KSBL provides to a spectrum of

investors, high-networth or otherwise, with equal dedication and competence. But this is not the final destination and

just a pathway to reach there.

44
Over the years KSBL have ensured that the trust of its customers is their biggest returns. Factors such as its success

in the Electronic custody business has helped build on its tradition of trust even more. Consequentially its retail

client base has expanded very fast.

To empower the investor further KSBL have made serious efforts to ensure that their research calls are disseminated

systematically to all its stock broking clients through various delivery channels like: e-mails, chat, SMS, phone calls

etc.

Their foray into commodities broking has been path breaking and KSBL is in the process of converting existing

traders in commodities into the more organized mainstream of trading in commodity futures, both as a trading and

risk
hedging
mechanism.

In the future, its focus will be on the emerging businesses and to meet this objective, KSBL has enhanced its

manpower and revitalized its knowledge base with enhanced focus on Futures and Options as well as the

commodities business.
(Karvy.com)
45
DIPOSITORY PARTICIPANTS
The onset of the technology revolution in financial services Industry saw the
emergence of Karvy as an electronic custodian registered withNational
Securities Depository Ltd (NSDL) and Central Securities Depository
Ltd (CSDL) in 1998. Karvy has further set standards enabling comfort to the

investor by promoting paperless trading across the country and emerged as the Top 3 Depository Participants in the

country in terms of customer service.

KSBL has established live DPMs (Depository Participant Modules), Internet access to accounts and an easier

transaction process in order to offer more convenience to individual and corporate investors. A team of professional

and the latest technological expertise allocated exclusively to the demat division including technological

enhancements like SPEED-e, makes the response time quick and delivery impeccable. A wide national network

makes efficiencies accessible to all.

(Karvy.com)
46
DISTRIBUTION OF FINANCIAL PRODUCTS
The paradigm shift from pure selling to knowledge based selling drives this industry today. With its wide portfolio

offerings, Karvy occupies all segments in the retail financial services industry.

The team of 1600 highly qualified and dedicated professionals, drawn from the best academic and professional

backgrounds is committed to maintaining high levels of client service delivery. This has propelled this wing to grab

a position among the top distributors for equity and debt issues with an estimated market share of 15% in terms of

applications mobilized, besides being established as the leading procurer in all public issues.

To further tap the immense growth potential in the capital markets it has enhanced the scope of its retail brand,

Karvy – the Finapolis, thereby providing planning and advisory services to the mass affluent. Here they understand

the customer needs and lifestyle in the context of present earnings and provide adequate advisory services that will

necessarily help in creating wealth. Judicious planning that is customized to meet the future needs of the customer

deliver a service that is exemplary. The market-savvy and the ignorant investors, both find this service very

satisfactory.
(Karvy.com)
47

Karvy- Stockbroking Limited

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