The interest rate futures (IRF) on 91-day T-Bills clocked a volume of around Rs 730 crore on the National Stock Exchange (NSE) on the first day of trading on Monday, according to bond market dealers.
About 8-10 banks participated in trading in the 91-day IRF. “It will take time for market participants to get their eye in and build-up volumes in this product,” said a dealer.
The pricing of the 91-day IRF could prove useful as a benchmark for the auction of the 91-day T-Bill next week, he added.
The new product has been launched at a time when there is a pressing need for a credible institutional hedging mechanism in view of the rising interest rates.
The 91-day IRF seeks to help banks, mutual funds and corporates to hedge their exposure to interest rates and cover the short-term interest rate risk. Foreign institutional investors too can participate in trading, but only for hedging purposes.