MSEI introduces trading in sovereign gold bonds

Also launches interest rate futures; one can now invest in derivative contracts on govt securities

In its endeavour to expand its bouquet of products and offerings, Metropolitan Stock Exchange of India Ltd (MSEI) has introduced new contracts in interest rate futures (IRF) and trading in sovereign gold bonds (SGB). The move is consistent with MSEI's approach of providing a rich and diversified product bouquet to market participants.

"The SGB will be available under the equity capital market segment. These are spot contracts with delivery based settlement and coupon of 2.75 per cent with tenure of eight years," said an exchange official.

Meanwhile, all six tranches of Sovereign Gold Bonds issued by Reserve Bank of India (RBI) till date are available for trading on MSEI platform for all categories of market participants. These bonds provide an opportunity for retail investors to buy gold in small quantities of 1 gram in dematerialised form and shall also aid in hedging against price fluctuations of gold.

The new (IRF) contracts are introduced for underlying 6.79 per cent government of India bond maturing on December 2029 (under thirteen years maturity bucket) with effect from January 10, 2017.

With this, MSEI now offers IRF contracts on all the nine government bonds, as approved by the regulators. More contracts at different maturity points provide a better yield curve to investors for their hedging and trading requirements.

The official said that calendar spread contracts based on these IRFs are also available for trading in the currency derivative segment of the exchange.

Meanwhile, MSEI is implementing business revival plan under which apart from product launches, the experience of trading on the exchange platform is being revamped. Recently, the exchange has introduced policies which make capital utilisation most efficient on MSEI platform for its members.

The transaction charges of the exchange for various segments have been re-calibrated to aid greater participation from members for improved liquidity and trade efficiency.

"It is a part of our strategy to address the entire exchange ecosystem which should be synchronised with the objective of providing newer products to fill in the market gaps, ease of connectivity and compliances and customer service orientation. In the recent time to come, exchange is working on innovations for products, technology and processes," said Abhijit Chakraborty, Chief Operating Officer, MSEI.