In keeping with the government's intention of making India
a global financial hub with mature capital markets across all
asset classes, the RBI and Securities Exchange Board of
India (SEBI) gave a go ahead for relaunching IRF in India. In this
regard, the National Stock Exchange (NSE) started trading IRF on
its exchange on August 31.
The response was encouraging with trading volumes of Rs. 276
cr on the first day of trade. Also, 14,559 contracts on two bond
futures, one maturing on December 2009 and the other maturing on
March 2010 were traded. Of these two contracts which were traded
that day, the December 2009 contracts were widely traded with
13,789 contracts registered.
In all, on the first day, 638 members from different parts of
the country took part and around 21 banks participated and the
first trade was executed by East India Securities. On the bank
side, Standard Chartered took the first move. State Bank of India was
the first public sector bank to trade and Union Bank of India was
the most active. The contribution of banks to the total volume
was around 33% showing an all-round participation.
This is not the first time that IRF have been trading in India.
They were first launched in India in 2003 and the need for
such instruments has existed from the time of liberalization of
the economy. The government of India pressed the pedal on the
reforms in the early 1990s and one of the major steps taken by
the government was to deregulate the economy and
embrace liberalization. In this process, the government deregulated
the interest rate in the late 1990s. Deregulation of the interest rates
led to volatility in the interest rates and a need was felt to have
interest rate hedging instruments. |
