BSE launches India's first exchange traded interest rate options
An interest rate option is a financial derivative contract whose value is based on rupee interest rates. These contracts will be a part of the interest rate derivatives in the currency derivatives segment
The BSE had launched interest rate futures in January 2014
Bombay Stock Exchange (BSE), the oldest stock exchange in Asia, on Monday launched trading in interest rate options based on Government of India securities. An interest rate option is a financial derivative contract whose value is based on rupee interest rates.
"BSE is the first and only exchange to provide trading of Interest rate options," India's leading stock exchange said in a press release.
In January 2014, the BSE had launched interest rate futures, which has an average market share of 40% and has now expanded its offerings in interest rate derivatives with the launch of options.
These contracts will be a part of the interest rate derivatives in the currency derivatives segment.
"The contracts currently available for trading are based on the underlying government of India securities such as 768GS2023, 668GS2031, 717GS2028, 726GS2029, 795GS2032, 727GS2026, 757GS2033," BSE said in a statement.
Interest rate options provide for an efficient tool for managing interest rate risk and exposure through hedging. With a wide array of instruments being made available, investors can hedge their risk across the yield curve, the company said.
Established in 1875, BSE provides a platform for trading in equity, debt instruments, equity derivatives, currency derivatives, interest rate derivatives, mutual funds and stock lending and borrowing. The BSE provides a host of other services to capital market participants including risk management, clearing, settlement, market data services and education.