New IRF contract sees Rs 2,273.36 cr trading on first day

The newly launched interest rate futures (IRF) contract on the stock exchanges -- BSE and NSE -- saw trading worth a total Rs 2,273.36 crore on its debut day.

The new IRF, which is based on 7.72 per cent central government security, started trading on the exchanges today.

The IRF contract will mature on May 25, 2025.

Trading in the contract on the National Stock Exchange stood at Rs 1,907.04 crore.

On the BSE, the new IRF contract saw a turnover at Rs 366.32 crore.

"The new 7.72 contract seems to have attracted good interest from the market, along with the existing 8.40 contract," NSE chief of business development (currency and debt market) Huzan Mistry said.

"The underlying market is also actively trading in the new bond," Mistry added.

With the new contract, the total IRF value traded at NSE crossed Rs 3,700 crore mark while daily average for the current year stand at Rs 2,500 crore, NSE said.

"Beside June, the stock exchange has also opened July and August contracts for trading. Most of the trading is seen in the near month contract (June)," it added.

An IRF is an agreement to buy or sell a debt instrument at a specified future date at a price that is fixed today.

The cash-settled IRFs provide market participants with option to hedge risks arising from fluctuations in interest rates, which depend on various factors, including RBI policy, demand for liquidity and flow of overseas funds.

The IRF market gets participation from retail, trading houses, FIIs and other institutions.