Most of the IRS have been undertaken by the foreign banks with both their corporate and financial sector clients. Since FRAs are essentially short term in nature, outstanding FRAs stand as nil. Whilst the banks can undertake derivative transactions both for hedging and market making, most of such transactions were assumed for hedging purposes up till now.
However, with greater sophistication of the market, the transactions for the latter are also expected to grow in future. 6  BIS Review 71/2006