Interest Rate Futures contracts shall commence at 12:00 noon on August 31, 2009.
Interest Rate Futures (IRF) are Derivatives contracts which have an interest bearing security as the underlying instrument. The value of contract rises and falls inversely to changes in interest rates. For example, if Interest rate (Bond Yields) rise, prices of Govt. bonds falls. Conversely also holds true.
BENEFICIARY OF THE PRODUCT
IRF as a product will be useful for:
Ø Entities wanting to benefit from a particular view on Interest Rate.
(For E.g. If one has a view that Interest rate will rise in coming days, he can "Short" the IRF contract and Conversely also holds true.)
Ø Entities exposed to Interest Rate risk, primarily banks, insurance companies, pension funds, corporate and others.
(For e.g. If a retail investor wants to take a loan after 1 year and has a view that Interest Rate will rise from 8% to 10% in 1 year, he can "Short" the IRF contract to hedge his position)
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