Interest rate futures witnessed high trading volumes in the OTC market. However, the success could not be replicated in the Indian derivatives market because of the difference in pricing methodology.With changing times, the Indian capital market is making its mark in the global arena by launching globally traded products. Earlier they were traded on the OTC market where the trading volumes were significant. Owing to the good response, RBI announced the launch of these instruments. With the launch of interest rate futures, the Indian derivatives market offers various products such as index futures and options, stock futures and options, commodity futures, gold futures, and interest rate swaps. All these instruments are launched with a purposeto hedge the risk of the trader with a minimum capital requirement.

Following the formal launch, the turnover recorded a zero trading volume in the month of September 2003. This downturn was due to the mispricing of interest rate contracts that led to loss. Till now active derivatives trading in India is limited to equity, index, and commodities. These newly launched interest rate derivatives and currency derivatives are passive instruments in the Indian derivatives market.

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