BANKS CAN TRADE IN INTEREST RATE FUTURES
The Reserve Bank of India said that the Banks can now take trading positions in interest rate futures
(IRFs). These guidelines will also be applicable to overseas branches of Indian Banks. Earlier banks were allowed to transact in IRFs for the purpose of hedging the risk in their underlying investment portfolio. Earlier banks could only buy IRFs, now they can also sell. This may improve volumes in the IRFs market. However, with the requirements of margins in the future market, the impact may not be much. This is just one more instrument for banks for hedging.
(IRFs). These guidelines will also be applicable to overseas branches of Indian Banks. Earlier banks were allowed to transact in IRFs for the purpose of hedging the risk in their underlying investment portfolio. Earlier banks could only buy IRFs, now they can also sell. This may improve volumes in the IRFs market. However, with the requirements of margins in the future market, the impact may not be much. This is just one more instrument for banks for hedging.
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