One example of such an instrument is interest rate futures, where after an overhaul in 2013–14, the last 12 months’ average daily trading volume was close to Rupees 23 billion (despite falling in recent months). An investor, bank, or corporation can use the IRF market to gain or shed interest exposures as they desire.
The key to the success of this market has been to allow the design of the relevant instrument to be governed by market participants, while ensuring regulatory concerns are satisfied. We are proceeding in a similar way with money market futures contracts. Not all innovative instruments have been successful.