MCX-SX Starts Live Trading in IRF

Pursuant to Securities and Exchange Board of India’s (SEBI) approval on January 10, 2014 to introduce Interest Rate Futures (IRF), MCX Stock Exchange (MCX-SX) today started ‘live’ trading in cash-settled IRF in its Currency Derivatives Segment.

Among the first to trade on the product were IDBI Bank and ICICI Securities Primary Dealership Ltd. from the institutional side and the East India Securities Ltd. from the intermediary side. The product witnessed turnover of Rs 928.39 crore on the Exchange, with total traded volume at 45642 lots. At the end of trading day, the Open Interest (OI) position stood at 10690 lots.

The cash settled IRF on 10-year Government of India security is expected to widen the market and provide a better option for market participants to hedge against volatile interest rates. The product will benefit various institutions such as Banks, Brokerage Houses, Insurance Companies and Primary Dealers, enabling them to effectively manage their interest rate risks.

Banks that traded on the first day included Andhra Bank, Axis Bank, Bank of Baroda, Bank of India, Canara Bank, Federal Bank, HDFC Bank, IDBI Bank, State Bank of India and Union Bank of India among others.

Commenting on the development, Mr. Thomas Mathew T., Vice-Chairman, MCX-SX, said, “There has been a demand by market players for cash-settled IRF products. The decision of the regulators to introduce cash-settled IRF will go a long way in widening and deepening the Interest Rate Derivatives market.”

The newly appointed MCX-SX Board has been announcing various significant measures to develop various market segments, generate healthy volumes and attract larger participation on the Exchange. The new Board was formed as part of SEBI’s efforts to ring-fence MCX-SX and in November 2013, Mr. GK Pillai and Mr. Thomas Mathew T. were appointed Chairman and Vice-Chairman, respectively.

Mr. Pillai, IAS (Retd.) is the former Home Secretary to the Government of India and 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.