MCX-SX Gets SEBI Approval to Launch IRF Segment

Following approval from the Securities and Exchange Board of India (SEBI) to introduce Interest Rate Futures (IRF), MCX Stock Exchange (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.

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.

Commenting on the development, Mr. Thomas Mathew T., Vice - Chairman, MCX-SX, said, “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 (IRD) market is an important step in placing the Indian markets on par with developed economies. We will soon take this segment live.”

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, Mr. GK Pillai and Mr. Thomas Mathew T. were appointed Chairman and Vice-Chairman in November, respectively. Mr. Pillai, IAS (Retd.) was former Home Secretary to the Government of India while Mr. Mathew retired as Current-in-Charge Chairman of Life Insurance Corporation of India.

Other members of the reconstituted Board include two Public Interest Directors —Prof. (Mrs.) Ashima Goyal, Professor at the Indira Gandhi Institute of Development Research and Mr. D.R. Dogra, MD & CEO – Credit Analysis and Research Limited. Mr. U. Venkataraman is CEO - Debt Segment & Whole-time Director (Shareholder Director) at MCX-SX.