These instruments are an important component of the overall financial sector strategy and the broad regulatory objective is to ensure that they are used to their potential in ways that are consistent with both financial development and the contribution of financial markets to economic growth.
I would like to begin by laying out a simple framework, which helps us think about financial sector development in terms of multiple objectives. This will provide a useful backdrop to the various issues relating to derivatives in India, which I will then go on to talk about. Financial sector development can broadly be viewed as pursuing four objectives.