Trading in interest rate futures got underway on the National Stock Exchange (NSE) on Monday and within minutes had over 600 members logged in and over 1,600 contracts traded.
An interest rate futures contract is an agreement to buy or sell an underlying government bond on a future date at a price fixed today. Prices of the contract would increase if interest rates fall resulting in gains for buyer of the contract and vice versa.
“This is a re-launch and reincarnation of the product launched a year back, and returning after having corrected deficiencies that market noticed,” said Finance Secretary Ashok Chawla at the launch.
Chawla also said that the government is working with regulatory agencies to bring about financial sector innovations and reforms.