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NSE to launch 6-yr govt bond futures from Dec 30

The National Stock Exchange (NSE) will introduce new interest rate futures (IRF) contracts from December 30 on six-year government bonds maturing in 2022.

The IRF contract is based on 6.84 per cent central government security maturing on December 19, 2022, will be made available for trading from December 30, this year, NSE said in a circular.

An IRF contract is an agreement to buy or sell a debt instrument at a specified future date at a pre-determined price.

The cash-settled IRFs provide market participants an option to hedge risks arising from fluctuations in interest rates, which depend on various factors, including RBI policy, demand for liquidity and flow of overseas funds.

The IRF market gets participation from retail investors, trading houses, foreign portfolio investors (FPIs) and other institutions.

The exchange, earlier this year, had introduced IRF contracts on government bonds maturing in May 2030.

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