BSE launches trading in Interest Rate Futures

All the trading members of the currency derivative segment and equity derivatives will be eligible to trade in the Interest Rate Futures contract enabled on the exchange

January 28, 2014 4:50 IST | India Infoline News Service
BSE, Asia’s first stock Exchange, today launched live trading in new interest rate futures, in 10 Year Government of India (GoI) securities. As per the guidelines issued by the regulator, trading will be allowed in Cash settled  'Single bond futures'. GOI Bonds with residual maturity of 9 to 10 years on the date of expiry of futures contracts are eligible for such trading. 

The BSE Interest Rate Futures (IRF) contracts on 10 year cash settled government securities  was launched by the Chief Guest, SEBI Chairman, Shri U. K. Sinha, and Guest of Honor Executive Director, RBI, Shri R. Gandhi. 

SEBI Chairman UK Sinha said, “I would like to emphasize that the launch of Interest Rate Futures in its present form is a very important occasion in this country.  The launch of Interest Rate Futures in this country is an example of regulator, market participants and institutions working together. We look forward to further development of bond market going forward. I would like to congratulate the team at BSE on the launch.”

RBI Executive Director R Gandhi said, “An emerging economy is always in need of new financial products that help it grow. The single bond futures have been designed by the demand of the investors and market participants. This is a unique product for our country and I am sure it will be successful this time with active participation from all market participants. Indian economy is unique in a way and there is a need for specific products customized to suit the needs of Indian investors. I would request BSE to plan to offer the standard basket based products in the near future in addition to bond futures. I thank SEBI for their continuous support and I congratulate BSE on the launch of Interest Rate Futures.”
BSE Director Sudhakar Rao said, BSE has been in the forefront to bring the latest and cost effective products and services to meet the aspirations and growing needs of the investors. The surveillance and risk management system at BSE has made it the most efficient trading platform in the country. BSE has fully adhered to all guidelines by the regulator. Following the success of BSE’s market leading offerings such as BSE SME platform, BSE Star MF, BSE Currency Derivatives, we are pleased to announce the launch of Interest Rate Futures at BSE.
All the trading members of the currency derivative segment and equity derivatives will be eligible to trade in the Interest Rate Futures (IRF) contract enabled on the exchange. The exchange enabled 'mock' trading for participants from January 7 of this year. The minimum contract value for price trade has been set at INR 200,000 i.e. USD 3200. Monthly serial contracts with maximum maturity of three months expiring on last Thursday of the expiry month and value date for settlement is the next working day are available for trading.
BSE has enabled trading in single security future products including, 7.16% GoI maturing on 20th May 2023, 8.83% GoI maturing on 25th November 2023 and calendar spread facility for trading across 3 contract months.
Commenting on the development, Ashishkumar Chauhan, MD & CEO, BSE Ltd said “Globally, the market size of interest rate derivative contracts, such as IRFs is much larger than all other derivatives, including equities and commodities. BSE is happy to introduce trading in new interest rate futures on government securities. This will certainly help investors in hedging their risks against the interest rate volatility along with the wealth creation.”
Besides trading members market participants like Banks, Primary Dealers, FII's, Mutual Funds, Corporates, NBFC’s, HNI’s, Individuals etc can participate in trading on this product.   There was wide-spread participation from Trading Members. First Institutional trade was done by ICICI Bank and ICICI Securities Primary Dealership. Amongst other Institutional participants which traded on the first day of trading includes HDFC Bank, IDBI Bank to name a few.
The contracts are available in the new trading architecture of BSE trading system, called ‘BOLT Plus’. Bolt Plus platform is based on T7, the global trading architecture of Deutsche Bourse AG. One of the key features of the new system is a response time of approximately 200 micro seconds making it the fastest trading platform in the country today, several times faster than the nearest competition.

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