The only major liquid product, however, continues to be the Mumbai Interbank Offer Rate (MIBOR) based Overnight Indexed Swaps (OIS) market. Participation in the IRD markets is also largely limited to foreign banks, private sector banks and primary dealers.
I am happy to note that based on RBI Directions, FIMMDA formulated the operational guidelines for trade in swaptions in consultation with market participants and trading in swaptions have commenced. It is also an opportune time to consider new instruments to facilitate hedging of long-term interest rate and reinvestment risk by market participants such as insurance companies, provident and pension funds and corporates.