NSE, BSE and MCX-SX exchanges has received approval of the Securities and Exchange Board of India (Sebi), the market regulator, to introduce IRFs (Interest Rate Futures). MCX-SX is the first to offer live trading in Interest Rate Futures in 10-year government bonds in the currency derivatives segment with effect from January 20.
The National Stock Exchange and the BSE will also start live trading in IRFs this month. While the NSE will launch IRFs on January 21, the BSE will commence trading from January 28.
What is Interest Rate Futures?
Interest Rate Futures (IRFs) is a contract between a buyer and a seller for future delivery of an interest-bearing security such as government bonds.
The cash-settled IRFs will provide market participants with a better option to hedge against risks arising from fluctuations in interest rates.
All Members of Currency Derivatives Segment and their users will be allowed for participation in IRF trading. Members of Equity Derivatives segment will also be eligible to participate after compliance of relevant Membership norms being issued seperately.