• Investment World
• eWorld
• Brand Line
• Mentor
• Life
• Brand Quest
• The New Manager

Stocks

• Quotes
• SE Diary
• Scoreboard
• Open-End Mutual Fund

Cross Currency

• Rates
  
  

Shipping

• Ports
  
  

Archives

• Yesterday
• Datewise
• Resources
• In Focus
• In Depth

Group Sites

• The Hindu
• The Hindu ePaper
• Business Line
• Business Line ePaper
• Sportstar
• Frontline
• The Hindu eBooks
• The Hindu Images

Shobha Kannan
Adith Charlie

Mumbai, Nov. 29

Many corporates are going in for exotic derivatives, without realising the inherent risks involved in such deals, say analysts.

A recent Ernst & Young survey reports that 44 per cent of Indian corporates have exposure to such exotic derivatives.

The most commonly structured exotic derivatives are Barrier Options, Leveraged Collars, Collars, Caps, Floors and cross currency swaps, said Mr Farrokh Tarapore, Partner, E&Y.

Such products require banks to keep their clients constantly updated as they are based on complex mathematical models, according to Mr Nandlal Bhatkar, Chief Executive Officer, Pyxis Systems, which provides IT solutions for derivatives risk management.

The shift from the pure vanilla product to high risk instruments has exposed companies to greater threats, as noticed in the recent Hexaware incident, where the company suffered a loss of $20-25 million.

Senior treasury officials of banks feel that the increased volatility in the forex markets has propelled the need for such instruments.

More Stories on : Forex | Derivatives Markets | Consulting

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Surge in global prices may hit PEC wheat tender

Copyright © 2007, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line