Analyzing the Role of Innovative Financial Instruments in Developing the Depth of the Derivatives Market of the Tehran Stock Exchange

Abstract

This study aimed to identify and analyze the factors influencing the development and deepening of the derivatives market of the Tehran Stock Exchange and to propose an integrated framework based on capital market experts’ perspectives. This applied, qualitative, and exploratory study employed the Delphi technique. The study population consisted of academic and professional experts familiar with derivative instruments, trading mechanisms, market regulation, risk management, and economic analysis. Using purposive judgmental sampling, 20 qualified experts were selected. The Delphi process was conducted in three consecutive rounds. In the first round, data were collected through semi-structured interviews and analyzed using thematic analysis to identify the principal determinants of derivatives market development. In the second and third rounds, the extracted components were incorporated into Delphi questionnaires and evaluated by the experts in terms of their importance, impact, and necessity. Consensus was assessed using the median, percentage agreement, response stability, and Kendall’s coefficient of concordance (W). Expert consensus indicated that derivatives market depth is determined by the simultaneous interaction of market structure, capital market characteristics, macroeconomic conditions, and investor behavior. Market transparency, effective order size, trading structure, and liquidity emerged as major market-related determinants, while the presence of financial institutions and active market makers was also identified as fundamental to market deepening. Inflation, economic growth, and exchange-rate movements were confirmed as macroeconomic factors affecting participation incentives and the functional use of derivatives for risk hedging. Regarding investor behavior, loss aversion, risk tolerance, optimism, overconfidence, and ambiguity aversion influenced both the level and quality of market participation. The successive Delphi rounds ultimately supported an integrated framework in which structural, economic, behavioral, and institutional–infrastructural factors jointly determine sustainable derivatives market development. Sustainable development of Iran’s derivatives market requires a multidimensional strategy integrating greater liquidity, stronger market-making mechanisms, enhanced transparency and trading infrastructure, relative macroeconomic stability, expansion of specialized financial institutions, and improvements in investors’ financial literacy and professional behavior.