Sebi To Launch New Interest Rate Derivatives Product Soon

New Delhi, Nov 14: | Updated: Nov 15 2003, 05:30am hrs
The Securities and Exchange Board of India (Sebi) is planning to launch a new derivatives product on interest rates within a couple of months, according to Sebi chairman GN Bajpai. This comes after interest rate futures, which were launched with much fanfare by the Finance minister in June this year, has failed to take off on the bourses.

Mr Bajpai was briefing the media at the launch of a book on futures and options in New Delhi on Friday. The interest rate futures have recorded zero trading in the past two months. After registering volumes of Rs 182 crore in five days of trading in June, the month it was launched, the turnover in this segment had plummeted to Rs 19.36 crore in July and about Rs 1 crore in August.

While the derivatives market has become very popular with the investors, there is a need to bring in new products. Not before long we are planning to float a new derivatives product on interest rates, Mr Bajpai said. Asked about the new product at the sidelines of the function Mr Bajpai said, As the product is still in its laboratory stage, I would not be able to elaborate but the product may be launched in the next couple of months.

Replying to a query about the hefty inflows from foreign institutional investors (FIIs) and the doubts that a large portion of it may be Indian money routed through participatory notes, Mr Bajpai said, The money invested through participatory notes is currently 26 per cent of the total money invested. We are keeping a close watch on the developments in this front and take action if need be. FIIs have pumped in about Rs 23,500 crore in the current calendar so far which has been fuelling the sharp rally on the bourses. Sebi chief also said that the investigation into the unusual activity in the banking stocks earlier this year is still in process. However, he did not specify the time frame when this investigation would end.

Mr Bajpai evaded a query on whether the regulator would approach the Supreme Court against the Securities Appellate Tribunal (SAT) striking down Sebis order against Nirmal Bang in the securities scam of 2001. Saying that he would not comment on individual cases he added, We will move court against all SAT orders where we feel the discomfort.

Speaking on the occasion of the book release, Mr Bajpai stressed on the need to educate investors about the risks involved in the equity markets and the products available to hedge these risks.

He said that the success of stock futures in India is because the product existed in the form of badla and what the regulator did was just to transplant the same in the form of stock futures. In the process the derivatives market has become highly organised and thoroughly regulated.