Indian fixed income traders are preparing for the return of interest rate futures in the coming weeks. An initial futures contract was issued last year on the National Stock Exchange of India, but it was shunned because traders did not think the complex formula, which looked at the theoretical zero-coupon bond curve values, did not appropriately reflect market movements.
"The systems, infrastructure are in place--everything is ready, we're just waiting for the sign off," said Jayesh Mehta, head of debt at DSP Merrill Lynch in Mumbai.
The upcoming redesigned contract is expected to be linked more clearly to actively traded government bonds and should be more liquid, noted traders. "This will help the market and allow traders to go short," said another fixed income official.