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The derivatives markets have grown manifold in the last two decades. Table 1.1 presents
growth of the derivatives industry. According to the Bank for International Settlements(BIS), the approximate size of global derivatives market was US$ 109.5 trillion as at end–December 2000.The total estimated notional amount of outstanding over–the–counter(OTC) contracts stood at US$ 95.2 trillion as at end–December 2000, an increase of 7.9% over end–December 1999.Growth in OTC derivatives market is mainly attributable to the continued rapid expansion of interest rate contracts, which reflected growing corporate bond markets and increased interest rate uncertainty at the end of 2000. The amount outstanding in organized exchange markets increased by 5.8% from US$ 13.5 trillion as at end–December 1999 to US$ 14.3 trillion as at end–December 2000. The turnover data are available only for exchange–traded derivatives contracts. The turnover in derivative contracts traded on exchanges has increased by 9.8% during 2000 to US$ 384 trillion as compared to US$ 350 trillion in 1999(Table 1.2). While interest rate futures and options accounted for nearly 90% of total turnover during 2000, the popularity of stock market index futures and options grew modestly during the year. According to BIS, the turnover in exchange–traded derivative markets rose by a record amount in the first quarter of 2001, while there was some moderation in the OTC volumes.

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