BSE to launch interest rate futures in 8-10 weeks

MUMBAI: The Bombay Stock Exchange
(BSE) today said it would launch interest rate futures in the next 8-10 weeks following Sebi approval received

The capital market regulator yesterday approved the launching of BSE's interest rate futures with immediate effect, a release said here.

The over 100-year-old exchange, Asia's oldest, said it possessed the systems and processes for the launch of interest rate futures.

The BSE is a corporatised and demutualised entity with a broad shareholding base which includes two leading global exchanges, Deutsche Borse and Singapore Exchange as strategic partners.

This is not the first time that IRFs are being launched in India. Six years ago, the regulators had made a very cautious attempt to launch this interest rate derivative. However, there are several differences between then and now. Last time, the instrument was an absurd notional zero coupon bond whose pricing did not have any relation to any security in the bond market.

This time around, the security is a 10-year bond, a highly liquid instrument seeing thousands of crores of trade. Last time, banks could not trade which meant they could not take a view that bond prices could fall.