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Reserve Bank of India’s norms on bond forwards, which will come into effect from May 2, are expected to boost demand for forwards linked to 10 to 15-year state bonds, driven by wider yield spreads over government securities in this segment compared to longer maturities, said market participants.
The central bank has authorised the use of bond forwards in government securities—financial contracts in which two parties agree to buy or sell a government bond at a predetermined price on a future date. The move is aimed at enabling market participants, especially long-term investors, to manage their cash flows
