Nepal's derivative markets were still in their infancy as of my final check in September 2021. However, it is critical to confirm the present situation of the market because it may have evolved more since then. In this regard, I can supply you with some broad information on Nepal's derivative markets as of 2021:

Nepal's Derivative Markets:

Introduction
A derivative is a financial instrument that derives its value from an underlying asset or group of assets. Commodities, currencies, bonds, stocks, or indexes are examples of underlying assets. Derivatives assist investors and corporations in risk management, price movement speculation, and trading possibilities.

Nepal Stock Exchange (NEPSE): The NEPSE is Nepal's principal stock exchange, governed by the Securities Board of Nepal (SEBON). NEPSE had begun planning to sell derivative products as of my previous update in order to diversify its services and attract more investors.

Initial Steps

The Securities Board of Nepal (SEBON) granted the NEPSE permission to launch the derivatives market in 2017. The NEPSE advocated starting with index futures and gradually expanding to other derivatives.

Index Futures
Index futures are a sort of derivative in which the underlying asset is an index (for example, the NEPSE index). Investors can trade futures contracts based on their forecasts of the index's value's future direction.

Regulatory Framework

 Proper rules and risk management systems are required to ensure the smooth operation of derivative markets. SEBON was expected to have established principles and rules for derivative trading at the time of my last update.

Investor Education

The introduction of derivative products necessitates an informed investor base. SEBON and NEPSE would have most likely sponsored education and awareness campaigns to educate investors with derivatives and the hazards connected with them.

Challenges
Risk management, regulatory framework, liquidity, and maintaining fair and transparent trading methods are major issues in developing and operating a derivatives market.

It is vital to emphasize that the information provided here is based on the market's state as of September 2021. I recommend examining the latest publications, news stories, and official announcements from the Nepal Stock Exchange and the Securities Board of Nepal to get the most up-to-date and accurate information regarding Nepal's derivative markets.