Shyamala Gopinath: Over-the-counter derivative markets in India -
issues and perspectives
Article by Ms Shyamala Gopinath, Deputy Governor of the Reserve Bank of India, published
in Financial Stability Review, Bank of France, July 2010.
(Reproduced with permission from the Bank of France)
* * *
The present article tries to put in perspective the boundary conditions, imposed by the
macroeconomic constraints, which have guided the evolution of over-the-counter (OTC)
markets in India and underlines the point that the process of transiting from a predominantly
OTC based model to an exchange-traded model needs to follow a calibrated path. Through
this transition period, the overall regulatory approach towards OTC derivative markets is as
important as addressing the transactional aspects.
In India, unlike the developed financial markets where OTC derivative markets epitomised
complex, unregulated financial innovations that grew exponentially over the last two
decades, the OTC derivative markets have evolved within a regulated space. The major
elements of this regulatory framework include a broad specification of products to be
permitted, nature of participants in the markets, distinct responsibilities for market makers
and users for all OTC derivatives, effective reporting systems for capturing systemic
information and focus on developing market infrastructure for post-trade clearing and
settlement.
Given the above context, the OTC space in India for interest rate and forex derivatives will
continue to operate within a regulated manner with increased transparency. New instruments
for exchanges will be introduced in a gradual manner, as hitherto. Further areas for
strengthening the functioning of OTC markets will include greater standardisation of OTC
derivatives and extending central clearing arrangements for such contracts where feasible.
Work has already been initiated for designing a centralised trade reporting system for all
OTC derivatives for better systemic oversight and market transparency.
The over-the-counter (OTC) derivative markets, in particular credit derivatives, are now
perceived as the weak link in the financial system that increased the systemic risk of
contagion and exacerbated the financial crisis globally. Their complex and non-transparent
nature coupled with a light-touch regulatory approach towards them resulted in excessive
counterparty exposures and risk concentrations building up through the system. Naturally
there has been a concerted effort globally to reform the OTC derivative markets, with much
of the debate focusing on measures to address the issues of counterparty credit risk and
non-transparency. The revised template for reforming these markets, as is being pursued in
major jurisdictions, therefore broadly envisions greater standardisation of contracts to make
them eligible for central clearing, tighter counterparty risk management norms and higher
capital charges for all clearing-ineligible contracts and making these markets more
transparent.
The OTC derivatives are generally considered superior to exchange-traded derivatives in
their amenability to customisation to cater to specific risk management needs of clients. OTC
markets are also best suited to test innovative products, let them stabilise and get refined,
before these are considered suitable for wider offering through standardisation. However, the
explosion in the OTC derivative volumes over the past decade globally has largely been a
result of these markets moving out of the regulatory perimeter as part of a conscious policy
stand. The regulation of financial markets in key developed markets was reinterpreted as
being limited to regulation of the conduct of business aspect on exchange-traded markets,
under the presumption that the risks in OTC derivative markets would best be addressed
through entity regulation. As is now evident, this approach was found to be inadequate since
the entity regulation itself relied heavily on banks' own risk management frameworks and
more importantly, risks building up in the OTC space at the systemic level were lost sight of.
In contrast to the above, the predicament for countries such as India is qualitatively different
from the developed countries in terms of the nature and evolution of the OTC derivative
markets as well as the regulatory approach towards these markets.
1. Contextual considerations
Exchange traded derivative markets, to be efficient and complete, require a certain set of
policy framework for the underlying markets. Essentially what the exchange traded markets
demand are friction-free underlying markets with no restrictions on taking long or short
positions and a seamless integration between different segments enforced through free
participation by all agents. In simple words, efficient exchange traded derivative markets and
controls in the underlying market do not go together.
This is a fundamental challenge faced by the policy makers in economies where
macroeconomic and structural constraints as well as financial stability considerations
necessitate certain restrictions on the underlying markets. In the case of India, for instance,
there are policy-imposed limitations on participation by various economic agents. There is
still a requirement of an underlying exposure for undertaking forex derivative transactions.
Most importantly, the real sector tolerance for high volatility in exchange rates as well as
interest rates is limited and this makes policy interventions in the cash markets an additional
variable to contend with.
While exchange traded derivative markets do not fit into this framework, whatever their
operational benefits, OTC markets make it feasible to pursue market development in a
gradual framework within the given constraints. This is precisely what has happened in India
where OTC derivative markets have evolved to significant volumes.
It would be imperative to recognise the above considerations while chalking out the reform
path for OTC derivative markets in India. The nuanced terms of the reform proposals will
need to focus more on strengthening the OTC market framework instead of being embroiled
with binary consideration of OTC vis-à-vis exchanges.
2. Evolution of OTC derivatives
The financial derivative markets in India have evolved through a reform process over the last
two decades, witnessed in its growth in terms of size, product profile, nature of participants
and the development of market infrastructure. At present, the following categories of
derivatives are permitted:
OTC Exchange-traded
Forward rate Interest rate futures
Rupee interest rate agreements,
interest rate
derivatives
swaps
Foreign currency Forwards,
Currency futures
derivatives swaps, options
Index futures, index
Equity derivatives options, stock futures,
stock options
BIS Review 102/2010
The OTC derivative markets in India, unlike the developed financial markets where these
markets epitomised complex, unregulated financial innovations, have evolved within a
regulated space. The process of evolution needs to be seen in perspective of the boundary
conditions imposed by the broader macroeconomic framework for the development of the
financial sector.
The process of financial market reforms in India is less than two decades old. It was in March
1993 that a system of market-determined exchange rates was adopted by India as part of a
broad set of structural reform measures. Gradually, financing the fiscal deficit transitioned
from automatic monetisation to market-based borrowings resulting in a regular supply of
marketable securities. With regard to exchange rate, it was in August 1994 that the rupee
was made fully convertible on current account. These reforms allowed increased integration
between domestic and international markets and created a need to manage interest rate and
currency risks.
It was in the above backdrop that a menu of OTC products was introduced to enable the
economic agents to manage their risks in an effective manner. Being a bank dominated
system, it was natural that these products were offered through the OTC market with banks
acting as intermediaries. On the forex side, apart from forwards, which were in existence for
long, cross currency options not involving rupee, foreign currency-rupee options and swaps
were permitted for customers who have foreign currency exposures. The fundamental
requirement of existence of an underlying commercial transaction for entering into a
derivative, both on current or capital account, has remained through the years. The
determination of underlying exposure is largely based on current exposure and past
performance for trade related transactions. However, as an exception, borrowers having
long-term Indian rupee (INR) borrowing were permitted to use foreign currency-INR swaps to
transform these into a foreign exchange liability.
On the interest rate side, banks and primary dealers were allowed in 1999 to offer forward
rate agreement (FRA) and rupee interest rate swaps (IRS) to corporates for hedging interest
rate risk as also to deal in them for their own balance sheet hedging and trading purposes.
The size of the OTC interest rate and forex derivative markets in India is given in the Annex.
In case of securitisation, a regulatory framework was put in place after a sizeable market had
developed. The attempt was to standardise the differing practices being followed by banks
and address certain concerns on accounting, valuation and capital treatment. One of the key
provisions, among others, was to disallow upfront booking of profit/premium arising on
account of sale and requiring it to be amortised over the life of the securities issued by the
SPV. These measures went a long way in disincentivising some of the innovative structures
that created problems elsewhere. Furthermore, in view of the pass-through nature of the
securities linked to cash flows from the underlying assets, the risk of maturity mismatches is
reduced.
Credit default swaps (CDSs) are currently not permitted and are in the process of being
introduced to provide the participants an instrument to manage their credit risk. This is also
expected to aid the development of the corporate bond market. The aftermath of the crisis
provides an opportunity for countries such as India, which are starting on a clean slate, to
address some of the negative features associated with the product through an appropriate
framework design. It is proposed to start with plain vanilla single name CDSs on corporate
bonds in the OTC market. The guidelines, to be placed in public domain would broadly
emphasise on appropriate risk management framework, greater transparency in CDS
transactions and eventually providing a clearing framework.1
From a systemic perspective, a key issue would be of induced volatility in the credit markets
as a result of CDS markets. It is in this context that the issue of insurable interest becomes
relevant. Permitting naked CDS may increase buildup of speculative positions across the
system. It may also accentuate adverse incentives by encouraging leveraged credit
exposures and impeding effective resolution process. However, prohibiting naked CDS
would constrain market making in the product. The challenge would be to design a limit
structure within which market making could be facilitated by regulated entities. Stipulating
risk limits such as "risky duration"/"risky PV01"2 of CDS portfolio may need to be considered.
In the exchange traded derivative space, a more liberal approach has been adopted and in
the recent past. While currency futures and interest rate futures have already been
introduced on exchanges, currency options on USD/INR are in the process of being
introduced. While it is expected that these markets fulfil the genuine hedging requirements of
the participants, it is not possible to replicate the discipline of ensuring underlying commercial
transactions which is possible in the OTC market. Accordingly, the interest rate and currency
futures markets operate in parallel with the OTC markets with different set of stipulations.
3. Regulatory framework for OTC derivatives
Explicit regulation of OTC derivatives in India has been a key element of the policy
framework which has helped in preserving systemic stability. The responsibility for the
regulation of all interest rate, forex and credit derivatives, including OTC derivatives, vests
with the Reserve Bank of India (RBI). Legally, the RBI derives these powers from various
statutes including the Reserve Bank of India Act, 1934, the Banking Regulation Act, 1949,
the Foreign Exchange Management Act, 1999 and the Securitisation and Reconstruction of
Financial Assets and Enforcement of Security Interest Act, 2002.
The RBI Amendment Act, 2006, was a key milestone in explicitly laying down the regulatory
framework for OTC interest rate, forex and credit derivatives. The box gives a brief
background and provisions of this amendment.
Substantively also, regulation of these markets being with the RBI makes eminent sense.
The underlying variables in these markets viz. interest rates and exchange rates have critical
bearing on the macroeconomic management by the RBI and it is imperative that the
regulation of these derivatives are aligned with the larger policy objectives of monetary and
financial stability. Further, in all these markets banks are the dominant participants and the
overarching role of the entity regulator for banks i.e. the RBI provides the requisite synergy.
The major elements of the regulatory framework for OTC derivatives include a broad
specification of products to be permitted, nature of participants in the markets, distinct
responsibilities for market makers and users for all OTC derivatives, effective reporting
systems for capturing systemic information, governance and oversight and focus on
developing market infrastructure for post-trade clearing and settlement. The underlying
rationale for key stipulations is explained below.
(i) There is a requirement that for an OTC derivative transaction to be legally
valid, one of the parties to the transaction has to be a RBI regulated entity.
This is to ensure that the entire OTC derivative market is within the regulatory
perimeter. Prudential prescriptions for each class of participants may be decided by
the respective regulator within the broad policy framework but it makes systemic
monitoring possible.
(ii)
There is a clear distinction between the roles of market makers and users for
all OTC derivatives. It is the market makers which function as risk transferors in the
system. It is extremely important that these entities function in a totally transparent
and regulated manner. Only banks and primary dealers in case of certain interest
rate derivatives are permitted to act as market makers since extending this facility to
all agents can result in risks building up on the balance sheets of such entities.
Box 1
RBI Amendment Act, 2006
In 1999, by the Securities Laws (Amendment) Act, 1999, section 18A was inserted in Securities
Contracts (Regulation) Act, 1956 (SCRA) which reads as under:
"18A. Contracts in derivative - Notwithstanding anything contained in any other law for the time being in
force, contracts in derivative shall be legal and valid if such contracts are
(a) traded on a recognised stock exchange;
(b) settled on the clearing house of the recognised stock exchange,
(c) in accordance with the rules and bye-laws of such stock exchange."
In view of the said section 18A of SCRA, a doubt was raised about the legality of OTC derivatives such
as forward rate agreements and interest rate swaps permitted under RBI guidelines issued in July
1999. It was felt that these OTC derivatives could be deemed as wagering contracts and as such, void
under section 30 of the Indian Contract Act, 1872 and not legally valid under section 18A of SCRA.
Recognising that OTC derivatives play a crucial role in reallocating and mitigating the risks of
corporates, banks and financial institutions and that the ambiguity regarding the legal validity of OTC
derivatives inhibits the growth and stability of the market for such derivatives, suitable amendments,
effective January 9, 2007, were carried out to the Reserve Bank of India Act, 1934 (RBI Act).
Section 45V of RBI Act, 1934 (inserted by Reserve Bank of India (Amendment) Act, 2006) lays down
that notwithstanding anything contained in SCRA or any other law for the time being in force,
transactions in such derivatives, as may be specified by RBI from time to time, shall be valid, if at least
one of the parties to the transaction is RBI, a scheduled bank, or such other agency falling under the
regulatory purview of RBI under the RBI Act, the Banking Regulation Act, 1949, the Foreign Exchange
Management Act, 1999, or any other Act or instrument having the force of law, as may be specified by
RBI from time to time. It also provides that transactions in such derivatives, as had been specified by
RBI from time to time, shall be deemed always to have been valid.
The Act further gives powers to the Reserve Bank under Section 45W to "...determine the policy
relating to interest rates or interest rate products and give directions in that behalf to all agencies or any
of them, dealing in securities, money market instruments, foreign exchange, derivatives, or other
instruments of like nature as the Bank may specify from time to time." However, the directions shall not
relate to "the procedure for execution or settlement of the trades" in respect of transactions on
exchanges.
(iii) The users, including financial entities, are permitted to transact in derivatives
essentially to hedge an exposure to risk or a homogeneous group of assets
and liabilities or transform an existing risk exposure. This stipulation is
essentially to restrict speculative trading in derivatives by the real sector, whose
primary economic interest in undertaking derivative transactions should be to hedge
their exposures.
(iv) Derivative structured products (i.e. combination of cash and generic
derivative instruments) are permitted as long as they are a combination of two
or more of the generic instruments permitted by RBI and do not contain any
derivative as underlying. Structured products entail packaging of complex, exotic
derivatives into structures that may lead to increased build-up of risks in the system.
Some of these structures may simply be unsuitable for a large section of users given
(v) The responsibility for assessment of customer suitability and appropriateness
is squarely on the market maker. There are a detailed set of requirements that the
market maker needs to fulfil in this regard while selling any product to a user. As the
recent experience in many countries shows, inappropriate understanding of complex
derivatives by the buyers of these can have serious repercussions. The argument of
caveat emptor does not really work in practice, as many countries are realising on
account of huge derivative losses. It is ultimately a systemic issue and it is
important, in the interest of sellers of the products as well, that sufficient suitability
assessment is done before selling the product.
(vi) All OTC forex and interest rate derivatives attract a much higher credit
conversion factor (CCF) than prescribed under the Basel framework and all
The
exposures are reckoned on a gross basis for capital adequacy purpose.
applicable CCFs were increased in 2008 since it was felt that the conversion factors
prescribed under the Basel framework did not sufficiently capture the market
volatility of underlying variables in the Indian context.
(vii) Exposures of banks to central counterparties (CCPs) attract a zero risk weight
as per Basel norms. Additionally, collaterals kept by banks with the CCPs
attract risk weights appropriate to the nature of the CCP as reflected in the
ratings under the Basel II Standardised Approach. The latter was incorporated by
RBI as CCPs cannot be considered risk free entities.
(viii) All permitted derivative transactions, including roll over, restructuring and
novation are required to be contracted only at prevailing market rates. This
ensures that non-market rates are not used to manipulate cash flows current and
future.
(ix) There are regulations for participation by non-residents in derivative
transactions. This basically flows from the capital account management framework
which places certain restrictions for participation by non-resident investors in the
forex and interest rate markets.3
4. Clearing and settlement infrastructure for OTC derivatives
In India as early as in 2002, the Clearing Corporation of India Ltd (CCIL) commenced
guaranteed settlement of inter-bank spot forex transactions and all outright and repo
transactions in government securities, whether negotiated or under order driven systems.
CCIL has commenced non-guaranteed settlement of OTC trades in IRS/FRA in November
2008, covering over 75 per cent of the market turnover. CCIL also offers certain post-trade
processing services like resetting interest rates and providing settlement values to the
reporting members. Guaranteed settlement of these trades is expected soon. CCIL also acts
as central counterparty for spot and forex forward trades.
With the enactment of the Payment and Settlement Systems Act, 2008, the Reserve Bank
has the legislative authority to regulate and supervise payment and settlement systems in the
country. The clearing and settlement facilities offered by CCIL are governed by the risk
management processes which are assessed by the Reserve Bank through its offsite
monitoring and onsite inspections. The margins with the CCIL are maintained in the form of
cash and government bonds ensuring the quality and liquidity of the settlement guarantee
fund.
5. Transparency and reporting
The aggregate trade data relating to all OTC derivatives is required to be reported by banks
on a regular basis. On the forex side, while banks are required to report aggregate daily
sales/purchases of forex forwards and swaps, data relating to options is collected on a
weekly basis. Additionally, as part of regulatory reporting, banks report to the RBI
productwise notional principals of their outstanding derivative exposures on a monthly basis,
indicating the bifurcation between trading book and banking book, and benchmark-wise
details of interest rate swaps. They also report related credit risk exposure to their top ten
counterparties each in the financial and non-financial sectors.
In the recent past, important initiatives have been taken to enhance reporting disaggregated
trade data for OTC derivative transactions. A start was made in 2007 when all banks started
reporting the inter-bank interest rate swap (IRS) trade data on-line to CCIL. The collection of
client level trade data from banks has also started on a weekly basis from October 2009. The
traded price range and volume data on inter-bank trades is also being disseminated publicly
for market transparency.
Going forward, a working Group is looking into the issue of a single point centralised
comprehensive reporting of all OTC derivatives. The objective is two-fold: to make the
reporting more meaningful for regulatory assessment as well as market transparency and to
have a single-point reporting platform for all market transactions.
6. Issues going forward
Given the above context, the OTC market in India for interest rate, forex and credit
derivatives will continue to operate within a regulated framework with increased
transparency. New instruments for exchanges will be introduced in a gradual manner, as
hitherto. Further areas for strengthening the functioning of OTC markets will include greater
standardisation of OTC derivatives and suitably extending central clearing arrangements for
such contracts where feasible.
However, there are a few open issues which need to be addressed:
(i) standardisation is one of the prerequisites of moving
Contract standardisation:
contracts towards central clearing. There is merit in going by the argument put forth
in a recent Financial Services Authority (FSA) paper that there are benefits from
pursuing greater standardisation in itself, irrespective of whether these products are
then cleared or traded on an exchange. Given the vanilla nature of products
permitted in the Indian context, standardisation for existing products may not be
difficult.
(ii) Bilateral collateralisation: though bilateral collateralisation is considered an
efficient, though sub-optimal, solution to central clearing, it involves significant
trade-offs.

Move towards increased collateralisation could increase cost for hedging by
the real sector and place huge premium on availability of good quality
collateral. In case of client trades, it may need to be recognised that a
bankclient relationship is a much broader one and could include a credit
relationship as well. Provision of a facility-wise collateralisation may work
 Operationally, collateralisation is effective only if the exposure is calculated
frequently and there is a mechanism to exchange collateral dynamically. Who
would ensure this? It will invariably again be the bank's own model which will
be used to arrive at both the exposures in favour or against the bank.

From a systemic perspective, there is also the issue of procyclicality that gets
hardwired in the system through mark-to-market based collateralisation and
this would be equally applicable in the central clearing model.
(iii) Push towards central clearing: while CCP model is accepted as an ideal solution
form a counterparty risk perspective, it is being increasingly recognised that a
universal acceptance of CCP model would result in the concentration of risks at one
point, which would potentially become the single point of failure for market stability.
Certain issues become extremely critical in this regard:

Clearability of contracts would be a key issue. The essence of a CCP
arrangement is netting and margining, which are contingent on homogeneity
of the underlying asset, availability of reliable prices and sound risk models to
capture potential future exposures. The ability of models to capture tail risks is,
however, put to question post crisis.

It would become imperative for the CCPs to be treated as "too-big-to-fail"
systemic entities and be brought under the oversight of the systemic regulator
within a globally harmonised set of standards. In this regard one important and
as yet unresolved question is whether CCPs should have access to central
bank credit facilities and, if so, when. Given the incentives structures and the
lack of competition in such market infrastructure entities, it may be worthwhile
to consider CCPs as "public utility" and organise them as at-cost entities.
(iv) Higher capital requirements for non-cleared trades: the Basel requirements
already prescribe a capital charge for credit risk exposure of banks arising out of
OTC derivative transactions. In as much as these exposures are reckoned on a
gross basis, there is already a disincentive for bilaterally cleared OTC transactions
as against centrally cleared transactions. To further address the systemic risks
inherent in significant inter-bank OTC transactions, all such inter-bank exposures
may be subject to a higher capital charge.
(v) Role for bespoke products: this issue is more relevant for jurisdictions involving
product regulation, as in India. The trade-off is between the requirements of the real
sector and the risk assessment of the product. To give an example from our
experience, certain zero-cost forex option/swap structures were permitted in the
past to enable better design of hedging solutions for clients. These cost reduction
structures, introduced in 1996 inherently involved a trade-off between reduction in
the cost of hedging and retention of part of the downside risk. The concerns relating
to proper valuation, mis-selling of such products and other irregularities that
emerged in the recent past forced a re-evaluation of the propriety of allowing such
products in India.
However, interestingly, many corporates and industry associations represented that
prohibiting cost reduction structures will seriously impede the dynamic forex risk
management operations of corporates and their competitiveness in the global markets. It has
been suggested that structures may be allowed with additional safeguards to address the
leverage and mis-selling issues.
It would be interesting to see how the global debate in regard to the reform of the OTC
derivative markets finally settles in various jurisdictions. In some senses, the approach
seems an extension of the pre-crisis regulatory philosophy in these markets, with a
nonobtrusive view of financial markets and financial products per se, while concentrating on
stronger entity regulation and conduct of business aspect of the financial markets.
It would be important for the process to have any lasting impact that it is supplemented with a
framework for regulating markets from a systemic risk perspective as well as ensuring sound
prudential framework for regulation of all financial intermediaries engaged in derivatives,
exchanges and CCPs. The reform of OTC derivatives cannot be disassociated from the
larger perspective of the too-big-to-fail issue, at the heart of which is limiting the proprietary
trading by banks.
For countries such as India, the collective experience of the developed markets at the
epicentre of the crisis and their response in terms of changes to institutional and regulatory
models is a great opportunity to tread a new path. Hopefully we will find effective ways to
channelise the power of financial innovation in a more constructive manner.
Annex:
Size of OTC derivative markets in India
The BIS Triennial Central Bank Survey of Foreign Exchange and Derivatives Market Activity
in 2007 estimated that the percentage share of the rupee in total foreign exchange market
turnover covering all currencies increased from 0.3 percent in 2004 to 0.7 percent in 2007.
As per geographical distribution of foreign exchange market turnover, the share of India at
USD 34 billion per day increased from 0.4 in 2004 to 0.9 percent in 2007.
The activity in the forex derivative markets can also be assessed from the positions
outstanding in the books of the banking system. As of December 2009, total forex contracts
outstanding in the banks' balance sheet amounted to INR 36,142 billion (USD 774.25 billion),
of which over 86% were forwards and rest options (Table 1).
Table 1
Outstanding derivatives of banks: notional principal account
S. Item March 2007 March 2008 March 2009 December 2009
No
INR USD INR USD INR USD INR USD
billions billions billions billions billions billions billions billions
Foreign exchange
1
contracts 29,254 671.12 55,057 1,377.46 50,684 994.78 36,142 774.25
Forward forex
2
contracts 24,653 565.57 47,360 1,184.89 44,669 876.72 31,190 668.17
Currency options
3
purchased 4,601 105.55 7,697 192.57 6,015 118.06 4,952 106.08
4 Futures 2,290 52.53 2,743 68.63 3,511 68.91 3,447 73.84
Interest rate related
5
contracts 41,958 962.56 85,430 2,137.35 44,803 879.35 46,434 994.73
6 Of which :
single currency interest
rate swaps 41,597 954.28 85,159 2,130.57 44,377 870.99 46,073 987.00
Total -contracts/
7
derivatives 73,502 1,686.21 143,230 3,583.44 98,998 1,943.04 86,023 1,842.82
Source: RBI
With regards to interest rate derivatives, the inter-bank rupee swap market turnover, as
reported on the CCIL platform, has witnessed a decline in terms of notional sum in 2009 over
2008 before some recovery in 2010, mostly on account of early termination of the contracts
through multilateral netting (Table 2). The outstanding single currency interest rate swap
contracts in banks' balance sheet, as on December 31, 2009, amounted to INR 46,073 billion
(USD 987 billion) in notional principal while the amount of cross currency interest rate swaps
was relatively at a lower level. The overnight index swaps (OIS) based on overnight MIBOR
has been the most widely used OTC derivative for hedging interest rate risk. The market
participation, however, remains much skewed with the foreign banks as the major player.
The size of the Indian derivatives market is clearly evident from the above data, though by
global standards it is still in its nascent stage
Table 2
Outstanding volume in IRS for various benchmarks
MIBOR1 MIFOR2 INBMK3
Notional sum No. of Notional sum No. of Notional sum No. of
trades trades trades
INR USD
billions billions
INR USD INR USD
billions billions billions billions
End-march 2008 36,556 838.63 61,665 6,116 140.31 16,528 137 3.14 368
End-march 2009 13,940 348.76 23,732 4,680 117.09 11,803 187 4.68 461
End-marc