Interest rates futures launch sees Rs267 crore trading

Trade in interest rate futures (IRFs), was launched on the National Stock Exchange on Monday, with the first day recording 1,475 trades resulting in 14,559 contracts being traded for a total value of Rs267 crore. In all, 638 members registered for trading in the new product, out of which 21 are banks.

Trade in IRFs, the newly-launched exchange traded derivative instrument for hedging interest rate risks, is expected to pick up, with regulators and government officials staying that the exchange-traded instruments are superior to over-the-counter overnight index swaps.

Finance secretary Ashok Chawla, struck the gong to kick-off trading at noon, in the presence of Securities and Exchange Board chairman C B Bhave and Shyamala Gopinath, deputy governor of the Reserve Bank of India.

IRFs are based on a notional 10-year GOI bond, bearing a notional 7 per cent interest rate coupon payable half yearly. The tradable lot size for IRF is Rs2 lakh.

State Bank of India, Union Bank of India, Central Bank of India, Axis Bank, ICICI Bank, and Standard Chartered Bank actively traded in the IRF market on Monday.

Speaking at the launch, Gopinath said, ''Unlike the OTC interest rate swap market (OIS), which is really an inter-bank market dominated by banks, this is more transparent and price discovery is there. Probably, going forward, the OIS will evolve to offer customised products to customers, maybe longer term in nature.''