Interest rate futures' turnover hits Rs 1.5 lakh cr even as trading volume slips

Interest rate futures’ turnover nearly hit Rs. 1.5 lakh crore on bourses in the first half 2014-15, even as trading value in September slipped by nearly 32 percent as against the previous month.

Trading of interest rate futures (IRF) on BSE, National Stock Exchange (NSE) and MCX-SX cumulatively stood at about Rs. 1.48 lakh crore during April-September.

In September, however, the total trading value on the three bourses dipped 31.8 percent to Rs 19,516 crore over the preceding month.

Turnover of IRF cumulatively stood at Rs 28,644.62 crore in August, data from 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 this year.

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Individually, NSE accounted for the highest share (93.7 percent) in turnover among the bourses, during the first six months of the current fiscal y7ear. The bourse recorded a turnover of Rs. 1.38 lakh crore on its platform for IRF.

At the same time, the IRF value stood at about Rs 7,831 crore on BSE followed by Rs 1,413.16 crore on MCX-SX.

For September, NSE saw an IRF turnover of Rs 17,926.62 crore, down 33 per cent from the preceding month. However, the exchange is much above BSE and MCX-SX both in terms of trading value and volume in IRF.

Trading value on the BSE dropped 9.65 per cent to Rs. 1,568.41 crore last month.

Besides, trading in IRF on MCX-SX also saw a sharp dip at about Rs. 21 crore in September from Rs. 92.18 crore in August. Trading of IRFs on this exchange was above the Rs. 100 crore level in the first four months of 2014-15 where in July it had recorded highest value for the fiscal year at Rs. 536 crore.

In terms of volume, the exchanges together traded 73.69 lakh contracts on their platforms during the first half of 2014-15, with as many as 9.78 lakh trades in the last month.

The number of trades recorded last month was 31.7 per cent lower than in August.

NSE registered trading of 69 lakh contracts while BSE IRF volumes stood at 3.90 lakh, for April-September period.

Besides, as many as 70,473 IRF contracts have been traded on MCX-SX for period under review.

Last month, the IRF contracts traded on NSE stood at 8.98 lakh, followed by BSE (78,484) and MCX-SX (1,047).

The cash-settled IRFs provides market participants with a better option to hedge risks arising from fluctuations in interest rates, which depend on various factors including Reserve Bank (RBI) policy, demand for liquidity and flow of overseas funds.

Banks, primary dealers, mutual funds, insurance firms, foreign institutional investors (FIIs), corporates and brokers, as well as retail investors can trade in this product.

PTI