<p>“We are working out the background material in consultation with the Reserve Bank for bringing out short-term interest rate derivative products on 91 day treasury bills and products based on call money market rates,” a senior Sebi official said on Tuesday. <br /><br />The two instruments, the official added, would be introduced shortly.<br />Interest Rate Futures (IRFs) are derivative contracts that provide holders a hedge against interest rate volatility. They are based on a fixed income security, namely, bonds. The price of the bond changes with variations in interest rates (yield), in opposite direction.<br /><br />Currently, IRFs are allowed on long term paper. Last month, the National Stock Exchange launched the 10-year government bond IRFs, offering contracts worth Rs 2 lakh each with a maximum maturity of 12 months.</p>
<p>“We are working out the background material in consultation with the Reserve Bank for bringing out short-term interest rate derivative products on 91 day treasury bills and products based on call money market rates,” a senior Sebi official said on Tuesday. <br /><br />The two instruments, the official added, would be introduced shortly.<br />Interest Rate Futures (IRFs) are derivative contracts that provide holders a hedge against interest rate volatility. They are based on a fixed income security, namely, bonds. The price of the bond changes with variations in interest rates (yield), in opposite direction.<br /><br />Currently, IRFs are allowed on long term paper. Last month, the National Stock Exchange launched the 10-year government bond IRFs, offering contracts worth Rs 2 lakh each with a maximum maturity of 12 months.</p>