Gokarn says RBI mulling futures with 2-, 5-year gilt as underlying security

The Reserve Bank of India (RBI) is considering introduction of futures contracts with two-year and five-year government bonds as underlying security, Deputy Governor Subir Gokarn said opn Wednesday.

Norms for credit default swaps will also be issued soon, he said. “The draft guidelines on CDS were placed on our website in February and we have received a large amount of feedback on those guidelines...we have had certain discussions and we expect to issue the guidelines very soon,” Gokarn said at a National Stock Exchange event.

He added the recent financial crisis had brought to light the risks involved in the over-the-counter derivatives market, and the RBI had therefore taken regulatory steps to reduce these risks.

“We believe that the OTC derivative markets here are quite well regulated,” he said. The deputy governor said the central bank had a calibrated approach towards developing the financial markets in India.