Interest rate futures (IRF) are contractual agreements to buy or sell underlying interest bearing instruments on a specific future date at a pre-determined price.

Interest Rate Futures traded on Exchange
Are standard contracts of a specified quantity
At a specified date in the future called settlement date
At a price that is fixed on the purchase date called futures price
Settled in delivery of deliverable securities.

Any resident Indian, Corporate, Banks Financial institutions and Foreign Institutional Investors (FIIs) can participate in the Interest Rate Futures market. However, at present, Non Resident Indians (NRIs) are not permitted to participate in Interest Rate Futures market.

Hedging:
Financial Sector:
Banks, mutual funds, foreign institutional investors, pension funds, insurance companies, and public provident funds) bears a major portion of the interest rate risk on account of their exposure to government securities.
Corporate Sector:
Interest rate futures will be highly appealing to corporate sector, having investment / borrowings and are exposed to risk interest rate risk will benefit from the product.
Household Sector:
Today, with a large stock of household financial savings on the assets side and an increasing quantum of housing loans on the liabilities side, interest rate risk is becoming increasingly important for the household sector as well.
Moreover, interest rate products are the primary instruments available to hedge inflation risk which is typically the single most important macroeconomic risk faced by the household sector.
In this context, therefore, Exchange-Traded Interest Rate Derivatives, a credible institutional hedging mechanism, provides all the sectors greater access to interest rate risk management tools.
Speculative Trading:
Interest Rate futures allow investors/traders to take a view on the movement of the local interest rates. The ETIRF provide an asset class with a very efficient, transparent and liquid system to trade on.
Speculative Trading:
Arbitrage with regard to Interest Rate Futures could be a trading strategy between two markets and can trade both cash and futures shall be able to identify any price different between two market places.
Typical arbitrage can take place between.
Whole Sale Debt Market or Retail Debt Market and Future Market
Investments in interest bearing securities and Future Market.
Borrowings and Future Market.

The increase and decrease in demand and supply dynamics of fund requirement which principally influence IRF rate. The factors like inflation, political and economic scenarios Globally India. There are a number of forces that must be taken into account when attempting to evaluate the current and future movement of interest rates.

Economy:When the economy is growing, consumers have jobs and savings to lend through banks, but they must also borrow for large. As the demand for funds increases, interest rates rise and act as a ration for the funds available. The opposite is also true; when the demand for funds is low, interest rates fall.

Inflationary / Recessionary pressures: will also affect interest rates, because the rates paid on most loans are fixed in the loan contract.

Government Action: The actions of the government have an effect on interest rates as well, because it is the nation’s largest borrower. In the Indian context Reserve Bank of India regulates the Interest Rate. Any changes in financial, economic or banking policies initiates.

International forces: play an important role in influencing interest rates. To the extent that foreign investors are willing to lend money, they supplement domestic sources of funds in the marketplace, driving interest rates down.

Fluctuation in US Dollar:The dollar is the main currency in international trade and is used extensively in world markets. Orderly fluctuations of the dollar in foreign exchange markets are essential for domestic and international stability. Major or very volatile exchange rate movements could force the Central Bank to act, as well as affect interest rates and the county’s monetary policy.

Changes Major Economies: Changes in the condition of the Major Economies will also have a significant effect on interest rates. If any large financial institution is threatened with collapse, it would not default on the funds which are owed to its depositors.

Exporters, Importers & Money Changers
Individuals / HNI’s investors
Borrower, FCY Loans, Corporate
Commodity, Jewelers, Diamond & Bullion Traders
Petroleum Product Traders
Banks & Financial Institutions
Professionals receiving remuneration in foreign currency
Investors investing in assets exposed to currency risk

(B) View Based Traders

Currency futures provide investors / traders an efficient platform to observe the movement of local currency (INR) against other currency (USD) and trade.

(C) Arbitragers

Currency Futures provides opportunity for Arbitrage Trading by taking advantage of price difference of the same or similar product between two or more markets by striking a combination of matching deals and capitalize upon the imbalance without any additional market risk.

Yes. Minimum size of USD / INR futures contract is USD 1000. This is well within the reach of small traders. All transactions on the exchange are anonymous and are executed on a price-time priority ensuing that the best price is available to all the categories of market participants irrespective of their size. Also since the profits / losses in futures market are collected / paid on a daily basis, the scope of losses for participants gets limited

Coupon is the interest paid by the issuer / Borrower (e.g. Government of India – GOI) to the bond holders / lender at periodic intervals.

In case of present IRF notional coupon is 7% with semi-annual compounding.

Features	Description
Underlying	10YGS7 (10-Year Notional Coupon-bearing GoI security)
Notional Coupon	7% with semi-annual compounding.
Trading Hours	9 a.m. to 5 p.m. (Monday to Friday excluding gazette holidays) or revision thereof on account of sun outage.
Size of the contract	INR 2 lacks
Quotation	Quoted in rupee up to 4 decimal points
Tick Size	The tick size of Rs. 0.0025 or 0.25 Paisa.
Price Circuit Limits	+/-5 % of daily settlement price
Available contracts	The Contract Cycle would consist of fixed quarterly contracts for entire year expiring in March – June – September and December
Tenure of Contract	will have a maximum of 12 month expiration cycle
Daily Settlement Price (DSP)	Last half an hour volume weighted average price (VWAP) of the future contract. In absence of last half an hour trading, the theoretical price as determined by the exchange would be the daily settlement price.
Daily Mark To Market	The daily mark-to-market settlement calculated based on the DSP shall be done on T+1 day.
Mode of Final Settlement	Physically settled by delivery of deliverable grade securities.
Deliverable Grade Securities (DGS)	GoI securities maturing at least 8 years but not more than 12 years from the first day of the delivery month with Minimum total outstanding stock of Rs 10,000 Crore. (List given below)
Invoice Price of DGS	Futures daily settlement price multiplied by the conversion factor plus accrued interest
Conversion Factor	The conversion factor for deliverable grade security shall be equal to the price of the security (per rupee of the principal), on the first day (calendar day) of the delivery month, to yield 7% with semiannual compounding. Given for each DGS in the list below)
Contract Settlement Price	Last half an hour volume weighted average price of the future contract (VWAP) at the normal market closing time on the expiry day
Last Trading Day/ Expiry Day for a contract	The trading in the current month contract will be ceased on the expiry day which is 7 days prior to the last business day of the expiry month (assuming both the days are trading days) at the normal market closing time on the expiry day.
Final settlement day	The final settlement day shall generally be the T+2 day from the expiry day of the contract.

IRFs are physically settled by delivery of deliverable grade securities. The Deliverable Grade of Securities (DGS) shall be the list of securities as specified by the Clearing Corporation from time to time.

To start with the deliverable grade securities, which fulfill stipulated criteria, along with respective conversion factors of the futures contract available for trading has been specified Deliverable basket and conversion factor for December 2009 contract

Yes, you will have to complete the registration for the currency derivatives segment. We have a separate Registration form for the Currency Segment which is required to be filled up.

Presently only USD / INR are available for trading..

Sr No	ISIN	Nomenclature	Date of maturity	Conversion Factor
1	IN0020020163	6.25% 2018 (conv)	2-Jan-18	0.9546
2	IN0020080019	8.24% 2018	22-Apr-18	1.0765
3	IN0020080019	8.24% 2018	22-Apr-18	1.0765
4	IN0019980286	12.60 % 2018	23-Nov-18	1.3616
5	IN0020030097	5.64 % 2019	2-Jan-19	0.9103
6	IN0020080068	6.05% GS 2019 (FEB)	2-Feb-19	0.9373
7	IN0020030048	6.05% 2019 (con)	12-Jun-19	0.9349
8	IN0020090042	6.90% 2019	13-Jul-19	0.9931
9	IN0020020171	6.35% 2020 (con)	2-Jan-20	0.9538
10	IN0020060318	7.94%2021	24-May-21	1.0722
11	IN0020010040	10.25% 2021	30-May-21	1.25

Deliverable basket and conversion factor for March 2010 contract

Sr No	ISIN	Nomenclature	Date of maturity	Conversion Factor
1	IN0020080019	8.24% 2018 (conv)	22-Apr-18	1.075
2	IN0020030063	5.69 % 2018(conv)	25-Sep-18	0.9171
3	IN0019980286	12.60 % 2018	23-Nov-18	1.3542
4	IN0020030097	5.64 % 2019	2-Jan-19	0.912
5	IN0020080068	6.05% GS 2019 (FEB)	2-Feb-19	0.9385
6	IN0020030048	6.05% 2019 (con)	12-Jun-19	0.936
7	IN0020090042	6.90% 2019	13-Jul-19	0.9931
8	IN0020020171	6.35% 2020 (con)	2-Jan-20	0.9545
9	IN0020060318	7.94%2021	24-May-21	1.0713
10	IN0020010040	10.25% 2021	30-May-21	1.2465
11	IN0020060037	8.20 % 2022	15-Feb-22	1.0949

Yes, you will have to complete the registration for the currency derivatives segment. We have a separate Registration form for the Currency Segment which is required to be filled up. The process of Registration and activation of your account will be completed in around 7 days from the day we receive the registration form duly completed in all respect along with all your documents..