Futures trading in bond index on BSE coming soon

MUMBAI: You have traded in stock index Sensex and Nifty, now get ready to trade in a bond index on the BSE. The S&P Dow Jones and the BSE will launch futures trading in 10-year India sovereign bond index from December, two people with direct knowledge of the issue said.

On Thursday, the Reserve Bank of India (RBI) and the Securities and Exchange Board of India ( Sebi) had allowed physically settled bond futures to be launched for 10-year government securities.

Sebi has specified that futures could be derived from either a 10-year government bond with residual maturity between 9 and 10 years, or a basket of 10-year bonds that have residual maturity of anything between 9 and 11 years.

The index will be traded on BSE’s BOLT Plus, the system infrastructure that has a response time of 200 microseconds and was acquired from Deutsche Borse AG. Though BSE did not confirm when it plans to launch the bond index futures, a spokesperson said the exchange had already started disseminating data on the index from Friday.

Experts say a tradable bond index would go a long way in attracting volumes for the exchange traded interest rate futures market that has failed to pick up after its launch for nearly two years now. Currently, Crisil maintains Crisil long-term debt index, short-term debt index, liquid fund index, balanced fund index, MIP blended fund index, debt hybrid 75:25 index and debt hybrid 60:40 index among others. But none of these are traded.