Putting the building blocks in place

The concept of using derivatives for risk management is still relatively new to utilities in India and is viewed with caution by market regulators. Katie Holliday talks to market experts about how they expect the discipline of risk management to develop

The concept of financial risk management is still embryonic in Indian energy markets and although the trading of energy and commodity futures has grown during the past few years, the majority of liquidity stems from speculative interest rather than physical participants looking to hedge their risk. The bulk of Indian hedging activity is carried out by major players, such as refiners and consumers, participating on international exchanges. The lack of liquidity on domestic exchanges is currently