Trading in interest rate futures soon

5 banks test pre-launch of ASPA

First cross regulated product involving two regulatory agencies

Terms on exchange for SMEs will be finalised shortly

KOLKATA: The Securities and Exchange Board of India (SEBI) is all set to launch a scheme for interest rate futures. The guidelines are being formulated by a joint technical committee of the Reserve Bank of India and SEBI, C. B. Bhave, SEBI Chairman, said here on Tuesday.

Mr. Bhave, however, declined to give a timeline for its launch but said that this could be done soon. “The technical committee was working on this project and similar work for the currency futures product started in March and was completed in August.” Exchange traded currency futures were launched last week for transaction in rupee-dollar currencies. The settlement would be in rupee.

The interest rate futures would enable investors to hedge against interest rate movement. This would be the first cross-regulated product involving two regulatory agencies — the capital market regulator and the central bank. It is expected to be ready within six months.

Participating at an interactive session on New Generation Financial Market, organised by the Merchants’ Chamber of Commerce, he also announced that three public sector and two private sector banks would test run next week a SEBI project called ‘Applications Supported by Blocked Amount (ASPA), which would allow investors to apply for shares in the Initial Public Offering (IPO) without actually sending cheques from their banks (and then chasing refund orders in case they failed to get their desired allotments).

Elaborating on the ASPA project, Mr. Bhave told reporters later that this system was being evolved so as to protect small investors who faced difficulties in getting refund orders on their cheque payments made for an IPO. “A pre-launch testing has been done and the five banks participating in this pilot scheme are: SBI, Union Bank, Corporation Bank, ICICI and HDFC. They would test it during an IPO opening next week,” he said.

On exchange for small and medium enterprises, Mr. Bhave said SEBI had put out a paper sketching out the basic elements and the board would formulate its ideas and set the terms after receiving the feedback in this respect. “We will finalise the terms fairly soon,” he said.