DERIVATIVES IN PAKISTANIn 2001, Pakistan Stock Derivatives was launched on the Karachi Stock Exchange. At the start of this launch, a single futures stock was introduced and deliverable for one month only. Almost nine years have passed since then, but this stock market is not considered as developed as compared to the Indian market. The financial-related derivatives products which were traded in terms of exchange were initially launched in the Bombay Stock Market and the National Stock Market of India in June 2000. Some of the futures contracts linked to the index which were based on the BSE Sensitive Index (Sensex) and the S&P CNX Nifty Index (Nifty) were launched in the very first phase. Since then, the National Stock Exchange of India has seen a sharp increase in the volume of derivatives-related contracts. Generally, in developing or developed stock markets, individuals who invest in the market rely primarily on taking positions and derivatives related instruments with respect to the items that are underlying assets. The situation is not the same in Pakistan. From January to June 2010, the market consisting of futures contracts in the form of value and market value accounted for 3% and 8% respectively. In the last days of 2004 and the beginning of 2005, this contract was taken over in terms of volume. During this period, this value increased to 30 and 40% of market values. But unfortunately, at this time, due to the infrastructure market and weak risk management measures, such as for example the market crisis in March 2005, the leavers cannot maintain a position of influence. After the crisis, many measures were taken to manage...... middle of paper ......th market, who has authorization to trade there. Only one institution out of the total number has declared its regular participation in the market and along with it, 10 institutes have primary trading permission to seize arbitrage opportunities. 6 of them cover wallets they already own. (See Appendices A and B for survey results.) Next, institutions were asked to rate the derivatives market in Pakistan in terms of convenience and efficiency. The scale ranged from 1 to 5 and was “1” for “Excellent” while “5” was assigned to very poor. We obtained the response from 76% of participants in ranks “4” and “5”. It surprised us that a good number of institutions in our sample showed their belief that the regulatory authorities succeed in saving the interests of the investor in the derivatives market.