Financial Environment for Derivatives: Growth and New Dimensions for Financial Derivative Market in Pakistan; A Case Study

Abstract

This financial market structure shapes the neatness and certain stability of the marketplace. In the last decade, the financial market in Pakistan has become more volatile than it before. The Objective of this paper is to highlight the significance of derivative market in emerging economies like Pakistan with reference to its growth and new dimensions. The study further explains that the use of interest rate derivatives as a tool to solve their financial risk management problems along with its significance of development and financial market structure.  To achieve research objective, emerging Asian economies have been taken to analyze financial performance and need of Financial derivative market with derivative instruments trading volume. The study concluded that the development of derivative market is prerequisite in the current financial environment and supportive financial environment is essential for promoting and growth of financial market in Pakistan.

Key words: Financial Derivatives, Over-The-Counter, Interest Rate Risk and Financial Growth.