Sebi to launch derivative products


“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.

The two instruments, the official added, would be introduced shortly.
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.

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.

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