Just wondering what would happen if markets close for one quarter. @nithin will everything just blow up …or the country could go bankrupt. I mean I know all those things about why markets are there and so on .
Just curious to know what would happen in above type of case specially with reference to Derivatives positions.
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I found that OTC derivative (that are governed by ISDA Master Agreements) positions will get exercised on the eight day from the actual exercise/expiration date if the market continue to remain closed. This website explains it well -
Here are some recent examples of ISDA guidance when an unintended market closure happens -
But I am also curious about what would happen with exchange-traded derivatives (ETDs) in such prolonged market closure scenario.
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Actually isda is more of international thing ,not sure about it’s relevant in Indian markets which is very shallow ,I think it regulates otc market mainly
By this I mean banks and all…
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market provides liquidity and cashflow… if that is taken away there will be catastrophic effects… we are not economists to gauge the extent but we all can guess…