India’s G-Sec market infrastructure is arguably the best in the world. We have enabled guaranteed settlement in G-Secs, forex and interest rate swaps. Despite the existence of the facility to short sell and availability of futures and swap markets, it appears that for most banks investment activity essentially consists of two steps – buying and hoping for the best.
But hope should not be a Treasury desk’s primary trading strategy. RBI has also permitted money market futures about a year back. Those directions were a significant deviation from the earlier prescriptive approach. Exchanges were given complete freedom to design and introduce products. We are yet to receive any proposal for approval.