BSE and NSE to launch new IRF contracts from Wednesday
Mumbai: Leading stock exchanges BSE and NSE will launch new interest rate futures (IRF) contracts offering 7.17% yield on government bonds, from Wednesday.
The 10 year-bonds would mature on 8 January 2028, BSE and NSE said in separate circulars. An IRF is a contract between a buyer and a seller agreeing to the future delivery of any interest-bearing asset such as government bonds.
The cash-settled IRFs provide market participants an option to hedge risks arising from fluctuations in interest rates, which depend on various factors, including Reserve Bank of India (RBI) policy, demand for liquidity and flow of overseas funds. “Interest Rates Futures contracts based on 7.17 per cent central government security having maturity on January 8, 2028 will be made available for trading with effect from Thursday, January 11, 2018,” the circulars said.
Banks, primary dealers, mutual funds, insurers, FIIs, corporates and brokers, as well as retail investors trade in this product.
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