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Low derivatives participation due to lack of hedging culture:

Press Trust of India  |  Mumbai 

Lower investor participation in the derivatives market maybe due to absence of a culture of hedging, a said.

In terms of interest rate derivatives, apart from overnight index swaps (OIS), which has some volumes, there is not much traction in other exchange-traded or over-the-counter (OTC) derivatives market in the country, the said.

"One reason why the participation is not happening, I don't know whether it is a cause or effect, is the absence of hedging culture," ( regulation department), T Rabi Sankar, said at a CII financial market summit.

Recently, RBI came out with a draft guideline to allow non-residents to their rupee interest rate risk flexibly using any available interest rate derivatives (IRD) instrument.

Sankar said one of the issuse that needs to be addressed in the government securities market is investor diversity.

"Some amount of diversification is happening. We are trying to expedite that and also trying to get more foreign investors (in the government bond market)," he said.

According to him, should not follow practices of the developed market to improve efficiency of its financial market.

"If you want efficiency in India, don't read the book from developed market. You need to have your own book. Blindly importing policies is more likely than not to be a misadventure," he added.

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Fri, December 07 2018. 17:55 IST