Mumbai, June 13: The Reserve Bank of India has decided to allow primary dealers to hold trading positions in interest rate futures subject to certain prudential regulations. As per the June 3 circular, PDs were allowed to transact in exchange traded interest rate futures for the purpose of hedging the interest rate risk of their underlying government securities portfolio but this issue was reviewed by the apex bank following feedback from PDs, RBI said in a notification here on Thursday.
Some of the regulations pertain to construction and interest rate sensitivity of trading portfolio, capital adequacy and asset liability management classification.
The apex bank said trading portfolio of participants should be demarcated from that of hedging portfolio.
Bureau Report