It will provide a better option for market participants to hedge against volatile interest rates
MCX Stock Exchange (MCX-SX), on Thursday, said that it got the approval of the market regulator, Securities and Exchange Board of India (SEBI), to start trading in interest rate futures (IRF), which would go live from this month onwards.
“Following approval from the SEBI to introduce IRF, MCX-SX has decided to start live trading in January, 2014, in its Currency Derivatives Segment. The regulatory approval to MCX-SX to launch the new segment follows the renewal of the exchange’s recognition in September 2013,” MCX –SX stated in a release. Launch of cash-settled IRF will enable widening of the market, and provide a better option for market participants to hedge against volatile interest rates. The product will benefit firms such as banks, brokerage houses, insurance companies and primary dealers, who may use these contracts to effectively manage their interest rate risk.
“With the expected turnaround in the economy, there will be a growing need to bring to table the entire range of products for meeting investor needs. Development of the interest rate derivatives market is an important step in placing the Indian markets on a par with developed economies. We will soon take this segment live,” said Thomas Mathew T., Vice-Chairman, MCX-SX. Launch of the IRF segment is yet another effort by the newly-appointed MCX-SX board to develop all the market segments and generate healthy volumes by attracting larger participation. As part of SEBI’s efforts to ring-fence MCX-SX, G. K. Pillai and Mr. Mathew were appointed Chairman and Vice-Chairman, respectively. Mr. Pillai was former Home Secretary to the Central Government. Mr. Mathew retired as Current-in-Charge Chairman of Life Insurance Corporation of India. They took over after the exit of its Vice-Chairman Jignesh Shah and Managing Director and CEO Joseph Massey, following the scam-tainted National Spot Exchange Limited (NSEL) was brought under scrutiny. Mr. Shah and Mr. Massey were directors in that.
MCX-SX is yet to appoint a new Managing Director and CEO.