Market regulator plans trading in interest rate futures

September 2nd, 2008 - 7:39 pm ICT by IANS  

Kolkata/New Delhi, Sep 2 (IANS) Market regulator Securities and Exchange Board of India (Sebi) is planning to launch trading in interest rates futures to enable investors to absorb shocks arising out of fluctuations in interest rates, its chairman C.B. Bhave said here Tuesday.Bhave said a technical committee constituted jointly with the central Reserve bank of India (RBI), was looking into the interest rate futures, but declined to give a timeframe when the panel would give its report.

“This technical committee was constituted after the RBI put out its committee’s report on interest rate futures. Now I can’t give you a timeline for the trading to start,” Bhave said during an interaction with members of the Merchants Chamber of Commerce.

He said the technical committee for the currency rate futures was formed March 1 and trading begun by August end. “Our hope is we won’t need so much time for interest rate futures,” Bhave said.

In Delhi, however, Sebi full-time member T.C. Nair said trading would begin from January 2009.

“Exchange traded interest rate futures will be permitted latest by January,” Nair told reporters during a business meet organised by industry lobby Associated Chambers of Indian Commerce and Industry.

“This move aims at stabilising fluctuations and volatility in interest rates and hedge the situation from upside fluctuation and downside risk,” Nair said.

He said initially these futures contracts would be based on 10-year government bond yield, which should be settled by physical delivery.

Exchange-traded currency futures started at the National Stock Exchange (NSE) Aug 29. The Bombay Stock Exchange (BSE) and the Multi Commodity Exchange of India (MCX) have also received Sebi’s permission to start currency futures trade.

But questioned on widening the scope of the currency futures, Bhave said: “We have just started it. We need to gather experience before expanding it.”

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