Top stock exchanges NSE and BSE will launch a new 10-year bond futures contracts offering 6.97 per cent yield on government security.
The new interest rate futures (IRF) contract will mature on September 6, 2026.
What is Interest Rate Futures Contract?
An IRF is a contract between a buyer and a seller agreeing to the future delivery of any interest-bearing assets such as government bonds.
Banks, primary dealers, mutual funds, insurers, FIIs, corporates and brokers, as well as retail investors trade in this product.
The cash-settled IRFs provides market participants with a better 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.