NSE caps another feat, to launch interest rate futures from August 31

Trading in interest rate futures would no longer a dream in the country as the biggest Indian stock exchange, National Stock Exchange (NSE), is set to launch its trading from August 31. The NSE’s decision follows the recommendation of a joint technical committee of the Reserve Bank of India and SEBI in June for trading in the segment based on yields of ten years government bonds.

Well equipped with necessary software and technology as well as SEBI’s nod, the NSE had been conducting mock trading for the same for the past two weeks. Interest rate futures contracts trading would be launched in the currency derivatives segment (CDS) of NSE keeping market timings for trading from 9 am to 5 pm.

Keeping up the pace with NSE, the Bombay Stock Exchange (BSE) and the Financial Technologies group-promoted MCX Stock Exchange (MCX SX) have also adopted for trading in interest rate futures and have already applied for SEBI’s nod to launch interest rate futures. However, the two exchanges did not divulge the details of time when interest rate futures trading will be launched.

Last year in August, currency futures trading was launched by the NSE. The exchange is geared to take the first-mover advantage as well as to get benefits of not levying transaction charge on trades up to the end of this calendar year. Up to the end of the year, every trading member participating in the segment have been asked to make a lump sum contribution of Rs 500 to the Investor Protection Fund.

Taking an exception with the currency derivatives segment, foreign institutional investors (FIIs) and non-resident Indians (NRIs) are allowed to trade in interest rate futures. Other participants allowed for trading include banks, corporate houses, retailers and high networth individuals.