What is the role of exchange in derivative instruments?

[Ramesh]

Exchange’s role is very important in derivative instruments. It makes sure that both the buyer and seller honour their contract. If any party breaches, the exchange would settle their dispute using the margin paid by the defaulted party or by his broker’s deposit.

[Gopalakrishnan]

Exchange will collect & settle the margin deviation based on contract price on daily basis from buyers & sellers.

[V.VEDANAYAGAM]

EXCHANGE collects the refundable margin money from both parties in case of future contract
THAT margin will be used in case of the breaching party of the contract
IN the case of option daily leveling is done between option price and closing price of the stock till the expiry date of the opton

[Vijayakumar]

• Creates various derivative products based on one equity for trading in the market, depending upon the need.
• Collects the refundable margin from both the parties in case of future contract & from seller in case of call option & from buyer in case of put option.
• Settles the buyer & seller on a day to day basis (MTM) on future & settles at the expiry of the contract on optins
• In case of any dispute, makes sure that the responsibility is taken care by the broker.

[Swathi]

The exchange is the party which sees to it that the buyer/seller honours the contract. It collects refundable margin amount from parties for safety purpose.

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