The Metropolitan Stock Exchange (MSE) has become the first bourse to get a regulatory approval from the Securities and Exchange Board of India (SEBI) to launch weekly interest rate futures (IRF) contracts.
- Interest Rate Futures (IRFs) are futures contracts wherein the underlying financial instrument pays interest.
- In the Indian market, exchange traded IRFs are based on 6-year, 10-year and 13-year government bonds and 91-day government treasury bills.
Important Info :
Monthly versus weekly:
- Currently, both the National Stock Exchange (NSE) and the BSE offer trading facilities in such instruments but the contracts have a monthly tenor.
- It is expected that weekly contracts would give market players an avenue to hedge their risk exposure in the short term, especially during events such as central bank policy reviews, growth data releases and certain global events that can have a bearing on the interest rates in the domestic market.
Source : The Hindu