Interest Rate Futures in India—Needs a Huge Revival

Abstract

Interest rate derivatives account for over 70% of total outstanding positions in the derivatives space on a worldwide basis, according to Bank for International Settlements (BIS) statistics. In India, the trading in the newly launched derivates or, more popularly, the interest rate futures, began on August 31, 2009 on Currency Derivatives Segment clocking trading volumes of Rs 276 crore in their first day of trade. The introduction of trading in Interest Rate Futures (IRFs) in India is one more step towards integration of the Indian Securities Market with the rest of the world. Globally, interest rate derivatives are the favourite of the market and account for around 70% of the total derivatives transactions across the economies. In India, it may be seen as a path breaking initiative because it is expected to pave the way for various innovations at the derivatives front in the time to come.