Mumbai: The Reserve Bank has constituted a working group to examine the scope of participation of non-residents, including foreign institutional investors (FIIs), in interest rate futures.
The eight-member group, to be headed by RBI executive director V K Sharma, “would analyse the experience with Interest Rate Futures so far and focus, inter alia, on product design issues,” a central bank release said.
It would also examine the possibility of aligning the regulatory guidelines for banks for interest rate futures with the interest rate swap scheme.
The panel will also revisit the recommendations of the the earlier committees on related issues and interest rate futures that was introduced in June 2003.
RBI has appointed the working group in pursuance of the recommendations of the Technical Advisory Committee (TAC) on money, foreign exchange and government securities.
TAC in its 24th and 25th meeting in December 2006 and July 2007 respectively, has underlined the need for making available a credible choice of risk management instruments to market participants to cope with interest rate risk.
TAC had also emphasised that credible risk management instruments were necessary in context of the continued development in the financial market.