Millennium Post

Interest rate futures turnover hits `5 trillion-level in FY15

Investors seem to have taken to trading in Interest Rate Futures in a big way with the total turnover at nation’s three bourses in this segment reaching close to Rs 5 lakh crore mark in the fiscal 2014-15.

The cash settled instrument, which was launched in the capital markets in January 2014, had recorded a turnover of Rs 39,944 crore during 2013-14.

A total of 2.3 crore contracts were traded on the three exchanges during the last fiscal, 2014-15.

An IRF is a contract between a buyer and a seller agreeing to the future delivery of any interest-bearing asset such as government bonds.

It provides market participants with a better option to hedge risks arising from fluctuations in interest rates, which depend on various factors including RBI policy, demand for liquidity and flow of overseas funds.

Banks, primary dealers, mutual funds, insurance firms, FIIs, corporates and brokers, as well as retail investors can trade in this product. In a robust uptick, the cumulative trading value on stock exchanges has grown 5 times from Rs 14,000 crore a month in January 2014, to over Rs 63,000 crore in March this year. The total trading volumes has also grown to over 30 lakh a month, from less than ten lakh in January 2014.

Trading in Interest Rate Futures (IRF) on -- BSE, NSE and MSX (earlier known as MCX-SX) -- cumulatively stood at Rs 4.74 lakh crore in the financial year ended last month. Individually, the National Stock Exchange (NSE) led the charts with IRF turnover of Rs 4.21 lakh crore in the fiscal.
It was followed by BSE at Rs 41,913 crore and MCX-SX at Rs 10,312 crore. Looking at trends on the exchanges, turnover in IRF on the NSE began with nearly Rs 9,000 crore since its launch and has been trading in the range of Rs 17,000 crore to over 67,000 crore on a monthly-level since April 2014.

The bourse recorded it highest monthly turnover at Rs 67,290 crore in the segment in December before slipping to Rs 52,938.80 crore in March. On the BSE, the monthly trading value recorded a high of Rs 8,632 crore in February, before dipping to Rs 5,673.51 crore in March 2015. Starting with a turnover of Rs 4,054 crore in January 2014, trading in IRF on MSX mostly was on a downward slope for a year, but picked up in the previous two months. It recorded a negligible Rs 5 crore in October 2014 while no trades took place in the instrument in January 2015. However, the trading picked up significantly on the exchange in February (Rs 3,794 crore) and March (Rs 4,495.72 crore) of 2015. 

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