IRF trading value soars 30.7% to Rs 6 trillion in FY16

Indicating the rising popularity of Interest Rate Futures (IRF) among investors, the turnover from trading in this product on the India capital markets crossed the Rs 6 lakh crore level in 2015-16 -- a jump of 30.7 per cent compared to the previous fiscal.

Trading of IRF on -- NSE, BSE and MSEI -- cumulatively stood at about Rs 6.2 lakh crore, during 2015-16. In comparison, the total turnover stood at about Rs 4.74 lakh crore in the IRF segment during 2014-15, an analysis of the data available with regulator Sebi and the bourses showed. An IRF, generally a contract between a buyer and a seller agreeing to the future delivery of any interest-bearing asset such as government bonds, was launched on the three exchanges in January 2014.

Individually, NSE represented the highest share (79 per cent) in IRF turnover among the bourses, for the fiscal gone-by. The exchange recorded a 17 per cent jump in turnover to nearly Rs 5 lakh crore on its IRF platform for period under review. Interestingly, the bourse’s market share in this segment had stood at nearly 89 per cent in 2014-15. At the same time, the IRF trade value crossed the Rs one lakh crore mark on the BSE. The stock exchange now holds nearly 17 per cent market share in the category.

BSE had a recorded a turnover of Rs 41,912 crore, accounting for 8.84 per cent market share, during 2014-15. On MSEI, IRF turnover rose to Rs 21,636 crore from Rs 10,312 crore, for the period under review. In terms of volume, the exchanges together traded more than 3 crore contracts on their platforms during the last financial year. The number of trades recorded in 2014-15 was 2.26 crore. NSE registered trading of 2.43 crore contracts, while BSE IRF volumes stood at 51.71 lakh, during 2015-16.

Besides, as many as 10.76 lakh IRF contracts have been traded on MSEI during the last fiscal. The cash-settled IRFs provides market participants with a better option to hedge risks arising from fluctuations in interest rates.