Badla was an indigenous carry-forward system invented on the Bombay Stock Exchange as a solution to the perpetual lack of liquidity in the secondary market. Badla were banned by the Securities Exchange Board of India (SEBI) in 1993 (effective March 1994), amid complaints from foreign investors, with the expectation that it would be replaced by a futures-and-options exchange.^[1] Such an exchange was not established and badla were legalized again in 1996 (with a carry-forward limit of Rs 20 crore per broker) and banned again on July 2, 2001, following the introduction of futures contracts in 2000.^[2][3] A forward contract is an agreement between two parties to buy or sell an asset (which can be of any kind) at a pre-agreed future point in time. ... The Bombay Stock Exchange The Bombay Stock Exchange Limited (formerly, The Stock Exchange, Mumbai; popularly called The Bombay Stock Exchange, or BSE) is the oldest stock exchange in Asia. ... Market liquidity is a business or economics term that refers to the ability to quickly buy or sell a particular item without causing a significant movement in the price. ... The secondary market is the financial market for trading of securities that have already been issued in an initial private or public offering. ... Foreign direct investment (FDI) is defined as a long-term investment by a foreign direct investor in an enterprise resident in an economy other than that in which the foreign direct investor is based. ... A futures exchange, is a corporation or organization which provides a marketplace in which to trade derivatives such as futures contracts and options. ... An option contract is an agreement in which the buyer (holder) has the right (but not the obligation) to exercise by buying or selling an asset at a set price (strike price) on (European style option) or before (American style option) a future date (the exercise date or expiration); and... It has been suggested that History of the rupee be merged into this article or section. ... A crore is a unit in the Indian numbering system, still widely used in Bangladesh, India, Myanmar, Sri Lanka, and Pakistan. ...

Badla trading involved buying stocks with borrowed money with the stock exchange acting as an intermediary at an interest rate determined by the demand for the underlying stock and a maturity not greater than 70 days. Like a traditional futures contract, badla is a form of leverage; unlike futures, the broker—not the buyer or seller—is responsible for the maintenance of the mark-to-market margin.^[4] This article or section does not adequately cite its references or sources. ... For other uses, see Stock (disambiguation). ... For other uses, see Debt (disambiguation). ... The term financial intermediary may refer to an institution, firm or individual who performs intermediation between two or more parties in a financial context. ... An interest rate is the price a borrower pays for the use of money he does not own, and the return a lender receives for deferring his consumption, by lending to the borrower. ... The supply and demand model describes how prices vary as a result of a balance between product availability at each price (supply) and the desires of those with purchasing power at each price (demand). ... Maturity refers to the final payment date of a loan or other financial instrument, after which point no further interest or principal need be paid. ... In finance, a futures contract is a standardized contract, traded on a futures exchange, to buy or sell a certain underlying instrument at a certain date in the future, at a specified price. ... Ä¥In finance, leverage (or gearing) is using given resources in such a way that the potential positive or negative outcome is magnified. ... In finance, a margin is collateral that the holder of a position in securities, options, or futures contracts has to deposit to cover the credit risk of his counterparty. ...

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