ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846
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Exuberance in Financial Markets: Towards What End?

Annual turnover in five financial markets is now equivalent to more than 300 per cent of GDP. Across the gilt, forex, equity, derivatives and commodity futures markets, an easy policy environment has led to the current mood of extreme exuberance. Secondary market trading and even speculation do have a legitimate role to play in hedging of risk, price discovery and providing liquidity. But we need a range of measures to discourage froth in the markets. Such measures must include a change in the tax regime, a ban on trading in individual stock futures, demutualisation of commodity exchanges, and closer surveillance of FII investments.

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