Bond futures will be successful this time as the RBI has permitted banks and FIIs to participate in interest rate derivatives, said SEBI Chairman U.K. Sinha here on Tuesday.

Addressing the launch of NSE Bond Futures, Sinha said, the earlier attempts to introduce interest rate derivatives in 2003, 2009 and 2011 failed due to faulty design.

“Going forward, I hope RBI, SEBI and exchanges together would look at what is needed for the development of the corporate bond market,” he said.

Pointing to the linkages between currency and interest rate derivatives, Sinha said SEBI would look into the restrictions put on exchange traded currency derivatives which lead to reduction of volumes.

Sinha said the Government and SEBI were keen on introducing interest rate derivatives.

For the derivatives markets to be successful, the underlying had to be liquid and said regular issuance of Government paper across tenors and more liquidity in the repo market had already been suggested by various committees.

Sinha said SEBI has permitted NSE to introduce futures trading on the volatility index, India VIX.

India VIX is a measure of volatility (risk) or the rate and magnitude by which prices of Nifty options are expected to fluctuate in the next 30 days. Higher the value of VIX, higher will be the volatility and risk.

Responding to a question on the number of sub-brokers coming down by the day, Sinha said there was no cause for concern as they were being replaced by authorised persons.

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