RBI proposes to launch exchange-traded, OTC interest rate derivatives

Products to be accessible to foreign investors and retail participants too, but latter can only use for hedging

The Reserve Bank of India (RBI) on Tuesday proposed to introduce exchange-traded and over-the-counter (OTC) interest rate derivatives products that would be accessible to both foreign investors and retail participants.  Retail participants can, however, only use the product for hedging, while non-retail participants can use it for any purpose.   

In a draft guideline released on its website, the central bank said retail participants can be allowed to trade on Forward Rate Agreement (FRA), Interest Rate Swap (IRS), and European Interest Rate Options (IRO), including caps, floors, collars and reverse collars, while non-retail traders can take exposure in swaptions and structured