An IRF contract is an agreement to buy or sell a debt instrument at a specified future date at a pre-determined price.
The cash-settled IRFs provide market participants an option to hedge risks arising from fluctuations in interest rates, which depend on various factors, including RBI policy, demand for liquidity and flow of overseas funds.
The IRF market gets participation from retail investors, trading houses, foreign portfolio investors (FPIs) and other institutions.
"Spread contracts shall be available for trading with effect from January 11, 2017," BSE said.
The exchange had, last month, introduced IRF contracts on government bonds maturing in December 2022.
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