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Stock exchange major NSE has launched interest rate options on 10-year government bonds to provide institutional investors ability to manage risk through a non-linear product.

"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," said NSE Managing Director and CEO Vikram Limaye.

"Market participants can use options to trade and hedge interest rate risk on a transparent platform," he said

As per the statement, interest rate options are based on the underlying government 10-year bonds -- the 7.26 per cent 2029 bond and the 6.45 per cent 2029 bond.

The unit of trading is set at Rs 2 lakh face value of government securities, corresponding to 2,000 units.

Currently, interest rate futures are available on seven government bonds as the underlying, for residual maturity ranging from 4 years to 15 years.
 

 

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  Nifty Future Tips

Nifty future is nothing but the index future where the underlying is the S&P CNX Nifty index. In India, index futures trading started in 2000 in NSE. For Nifty futures contracts, the permitted lot size is 50, and in multiples of 50. Like other futures contracts, Nifty future tips contracts also have a three-month trading cycle - the near-month, the next month and the far-month.



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