7.1 CONCLUSION

Financial derivatives should be considered for inclusion in any organisation’s risk-control

arsenal. Using derivatives allows risk to be broken into pieces that can be managed

independently. The viability of financial derivatives rests on the principle of comparative

advantage i.e. the relative cost of holding specific risks. Whenever comparative advantage

exists, trade can benefit all parties involved. From a market-oriented perspective financial

derivatives offer free trading of individual risk components.

The need of the study was to check awareness about depository and to find out the

importance of derivatives and its products in the stock market where as the scope of study

was Jalandhar city only and objectives was to check awareness about derivatives among

trader and investors .

Then data analysis was both primary data is in the form of questionnaire which is used to

gather investor’s views about depository system’s services in India. The sampling method

used was basically convenience sampling. and secondary data is also used. Secondary data is

the data compiled by someone other than the user. It includes published data in the form of

documents, research papers, web pages and other organisational records. Tool of analysis was

non probability.

As there is always an other side of the coin, derivatives also have a darker side. Without a

clearly defined risk management strategy, excessive use of financial derivatives can be risky.

They can cause serious losses and can threaten the firm’s long-term objectives. Hence it is

important that users of derivatives fully understand the complexity of financial derivative

contracts and accompanying risks. Derivatives being an important risk management tool

necessitate its users to understand the intended function and the safety precautions before

being put to use. The use of derivatives should be integrated into an organisation’s overall

risk-management strategy and should be in harmony with its objectives. Hence the users of

derivatives can use these instruments for their benefit and for the benefit of the society at

large derivative contracts. These are generally not traded on exchanges and are structured

between parties on their own.

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7.2 RECOMMENDATIONS

1. Exchange should provide more information regarding derivatives.

2. Derivative products must be introduced by broker to his client.

3. Strategies should be made to check the effectiveness of derivative products.

4. Introduced seminars and meeting by brokers for the clients on derivatives .

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