Interest rate futures

Sebi set for interest rate futures in Q4
Hedging Tool For Banks To Beat Fluctuations

After successfully commencing currency futures, Sebi now plans to implement interest rate futures in the
fourth quarter of this fiscal. Speaking on the sidelines of a programme organised by Merchants Chamber of
Commerce on Tuesday, Sebi chairman C B Bhave said an RBI-Sebi joint committee is working out the modalities for this and would submit its recommendations soon.
Bhave said it would take lesser time to implement interest rate futures compared to currency futures. “We started working on currency futures in March and finally implemented it on NSE in August-end. But, we have gained experience through this and so interest rate futures will not take that much time,’’ he said. Interest rate futures help banks and FIs to hedge during interest rate fluctuations.
The Sebi chief said the regulator would examine the possibility of introducing more currencies like euro in the futures platform. “Now, it is only rupee and dollar in currency futures. Later, we could see more hard currencies.
NRIs and FIIs too can be allowed on this platform,’’ he added.
Stressing the need for more co-operation between regulators, Bhave said products like interest rate futures
involves two regulators—RBI and Sebi. “In future too, there should be more co-operation for new products.
Otherwise, new product launches will be delayed,’’ he said. Bhave said Sebi would introduce a pilot project for small investors called Applications Supported by Blocked Amount (ASBA) on September 8.
The project would be kicked off with the IPO of 20 Microns. Sebi has roped in five banks for this purpose—ICICI Bank, HDFC Bank, Corporation Bank, Union Bank and SBI.
Under the scheme, small investors don’t have to pay anything along with IPO applications. The bank where an investor has an account will block the amount for the time being. Only if the share is allotted, would the money be transferred from the account.
Commenting on self-regulatory organisations (SROs), Bhave said intermediary organisations are not keen to
become SROs. “We need a change of mindset,’’ he added.