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PTI Mumbai
Updated: 07-12-2018 17:53 IST

Lower investor participation in

the derivatives market maybe due to absence of a culture of

hedging, a Reserve Bank official 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 official 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," RBI chief general manager (financial markets

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 hedge 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, India should not follow practices of

the developed market to improve efficiency of its

financial market.

"If you want financial markets 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 Devdiscourse staff and is auto-generated from a syndicated feed.)