Mumbai, December 09, 2019: National Stock Exchange of India (NSE), India’s Premier Bourse Launched Interest Rate Options on Government of India Bonds. NSE launched interest rate options on 10-year Government of India bonds today. The first day of launch witnessed turnover of 5926 contracts. Participation was observed from more than 50 trading members.
Mr. Vikram Limaye, MD & CEO of NSE, said, “By launching Interest Rate Options, we have added one more instrument to the fixed income derivatives asset class. Interest rate options will provide institutional investors the ability to manage risk through a non-linear product which is otherwise not available to them. Market participants can use options to trade and hedge interest rate risk on a transparent platform.
With different categories of investors being a
llowed to participate from day one such as banks, primary dealers, foreign portfolio investors, corporates, etc., we hope to bring the same depth, breadth and efficiency that other asset classes have to this product.”
Interest rate options are based on the underlying Government of India 10-year bonds – the 7.26% 2029 bond and the 6.45% 2029 bond. The unit of trading is Rs. 2 lakhs face value of GOI securities, corresponding to 2000 units. The order quotation is the premium quoted as the price of GOI security and the tick size is INR 0.0025. The options contracts available are European Call & Put Options with minimum 8 in-the-money, 8 out-of-the-money and 1 near-the-money strike prices and a strike interval of INR 0.25. The contracts will be available for 3 serial monthly contracts followed by 3 quarterly contracts of the cycle March/June/September/December. The contract expiry is on the last Thursday of the expiry month and will be cash settled.
Currently, interest rate futures are available on 7 Government of India bonds as the underlying, for residual maturity ranging from 4 years to 15 years. The contracts are available for 3 Serial months followed by 3 quarterly contracts of the cycle March/June/September/December. The contract expiry is on the last Thursday of the expiry month and will be cash settled. An average daily turnover of around Rs 1,480 crores is observed in the current financial year on NSE.
About National Stock Exchange of India Limited (NSE):
National Stock Exchange of India Ltd. (NSE) is the leading stock exchange in India and the second largest in the world by nos. of trades in equity shares from January to December 2018, according to World Federation of Exchanges (WFE) report. NSE was the first exchange in India to implement electronic or screen-based trading. It began operations in 1994 and is ranked as the largest stock exchange in India in terms of total and average daily turnover for equity shares every year since 1995, based on SEBI data. NSE has a fully-integrated business model comprising exchange listings, trading services, clearing and settlement services, indices, market data feeds, technology solutions and financial education offerings. NSE also oversees compliance by trading and clearing members with the rules and regulations of the exchange. NSE is a pioneer in technology and ensures the reliability and performance of its systems through a culture of innovation and investment in technology. NSE believes that the scale and breadth of its products and services, sustained leadership positions across multiple asset classes in India and globally enable it to be highly reactive to market demands and changes and deliver innovation in both trading and non-trading businesses to provide high-quality data and services to market participants and clients.