The Securities and Exchange Board of India (Sebi) and Reserve Bank of India (RBI) will introduce interest rate futures in August, enabling further deepening of the Indian financial market.
At a CII Capital Market Conclave here on Saturday, MS Sahoo, a wholetime Sebi member, said Sebi and RBI was ?working to launch interest rate derivates in the market by August end.? MCX Stock Exchange managing director and CEO Joseph Massey said interest rate futures as a new product will increase the volume of trade in the market, which in turn will help the Indian market to become attuned to the global financial market.
?Increased product range will integrate the Indian capital market with the global market,? Massey said. Interest rate futures account for the largest volume and notional value among the financial derivatives traded on exchanges globally. According to Bank for International Settlement data, released last month, the notional principal amount outstanding in the organised exchanges across all future instruments amount to $18.5 trillion as of March 2009, of which $17.8 trillion pertains to interest rate futures.
For the Indian market, interest rate futures will present a much-required opportunity for hedging and risk management by a wide range of institutions and participants.
The participants will include banks and primary dealers, mutual funds, insurance companies, corporate houses, brokers, foreign institutional investors and retail participants. In fact, through this, banks will provide opportunity to depositors to access the capital market, Massey said. SME Equities would be another innovative product, which will enable the Indian capital market to operate in economies of scale, he added.