India decides to launch interest rate futures 17 Jun 2009, 2117 hrs IST, PTI

MUMBAI: India on Wednesday decided to introduce exchange-traded interest rate derivatives to

help corporates, banks and households guard against interest rates volatility, a move that came

nine months after launching of exchange- traded currency futures.

The derivatives would be based on the 10-year government bond yields, according to market

regulator Securities and Exchange Board of India (SEBI) and banking watchdog Reserve Bank

of India (RBI).

"Eligible exchanges desirous of offering interest rate futures may apply to SEBI after fulfilling

the conditions," SEBI said in a release.

The conditions are given in a report by an RBI-SEBI joint panel and are approved by both the

regulators.

The report said those having a networth of Rs one crore would become trading members and

those with Rs 10 crore networth would be clearing members in interest rate futures.

The contract would be settled by physical delivery, the panel said. The move will also help to

develop the debt markets.

Commenting on the development, Jagganadham Thunuguntala, equity head of SMC

Capitals, said, "It is an encouraging and welcome move. In India, debt market is non existent.

This is a move in right direction by SEBI to develop the debt market."