All market participants
As announced in the first Bi-Monthly Monetary Policy Statement, 2016-17,
it has been decided to introduce Interest Rate Futures based on any rupee
denominated money market interest rate or money market instrument on SEBI
authorised stock exchanges.
2. In this regard, the Reserve
Bank of India has issued a Notification
FMRD.DIRD.09/2016 dated October 28, 2016 amending the Interest
Rate Futures (Reserve Bank) Directions, 2013 dated December 5, 2013 to permit
cash settled interest rate futures based on money market benchmarks in
3. It may be noted that RBI had
already permitted introduction of futures based on the 91-day Treasury Bill,
which is a money market instrument. The purpose of the current directions is
to permit futures based on any money market instrument or money market
interest rate, other than the 91-day Treasury Bill Futures, which has been
4. Registered exchanges are free
to select the underlying instrument or interest rate and structure other
details of the contracts. However, before any new or modified futures
contract is introduced for trading on the exchanges, the registered exchanges
shall submit complete details of the futures contract, duly ratified by SEBI,
to the Reserve Bank for approval.
5. A copy of the Interest Rate
Futures (Reserve Bank) (Amendment) Directions, 2016 which is placed on the RBI
Website, is enclosed.
Chief General Manager
No.FMRD.DIRD.09/2016 dated October 28, 2016
Rate Futures (Reserve Bank) (Amendment) Directions, 2016
The Reserve Bank of India having
considered it necessary in public interest and to regulate the financial
system of the country to its advantage, in exercise of the powers conferred
by section 45W of the Reserve Bank of India Act, 1934 and of all the powers
enabling it in this behalf, hereby amends the Interest Rate Futures (Reserve
Bank) Directions, 2013 dated December 5, 2013 (the Directions).
1. Short Title and commencement
1.1 These directions shall be
referred to as the Interest Rate Futures (Reserve Bank) (Amendment)
1.2 These directions shall, come
into force with effect from October 28, 2016.
2. Eligible Instruments
In paragraph 3, after
sub-paragraph (iii) of the Directions, the following sub-paragraph (iv) shall
iv) Any Money market interest rate
or instrument other than 91-day Treasury bill
Explanation – ‘Money Market
Instruments’ are as defined in Sub-section (b) of Section 45(U) of the
Reserve Bank of India Act 1934. ‘Money Market Interest Rate’ means interest
rate on any money market instrument.
3. Necessary conditions of the
Interest Rate Futures contract
In paragraph 5, after paragraph
5.2.6 of the Directions, the following shall be added, namely:
5.2.7 Any futures contract issued
under para 3(iv) of these Directions shall satisfy the following requirements
futures contract shall be based on any Rupee denominated money market
interest rate or money market instrument.
method of computation of the rate/benchmark should be objective and
futures contract shall be cash settled in Indian Rupees or as approved by the
exchanges shall, before any futures contract is introduced on the exchanges,
submit complete details of the futures contract duly ratified by SEBI to the
Reserve Bank for approval.
Chief General Manager