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The National Stock Exchange will launch a new interest rate futures (IRF) contract from tomorrow, offering 7.72 per cent yield government bonds.
“We have received consent for launching new IRF contracts.
The 7.72 per cent government bond was launched on May 22 in the primary market and the NSE is now going to offer the same to derivative market participants from tomorrow on the futures platform,” the National Stock Exchange (NSE) said in a statement today.
The contract will mature on May 25, 2025, the statement added.
An IRF is a contract between a buyer and a seller agreeing to the future delivery of any interest-bearing asset such as government bonds. Banks, primary dealers, mutual funds, insurers, FIIs, corporates and brokers, as well as retail investors trade in this product.
The cash-settled IRFs provides market participants with a better option to hedge the risks arising from fluctuations in interest rates, which depend on various factors, including RBI policy, demand for liquidity and flow of overseas funds.
Currently, the daily average trading volume in IRF is around Rs 2,500 crore with around 2.5 lakh contracts outstanding on the NSE.
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