options purchased 4, 601 105. 55 7, 697 192. 57 6, 015 118. 06 4, 952 106. 08 2, 290 52. 53 2, 743 68. 63 3, 511 68. 91 3, 447 73. 84 41, 958 962. 56 85, 430 2, 137. 35 44, 803 879. 35 46, 434 994. 73 single currency interest rate swaps 41, 597 954. 28 85, 159 2, 130. 57 44, 377 870. 99 46, 073 987. 00 total - contracts / derivatives 73, 502 1, 686. 21 143, 230 3, 583. 44 98, 998 1, 943. 04 86, 023 1, 842. 82 4 futures interest rate related contracts 6 of which : 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 notional sum mifor2 no. of trades inr usd billions billions notional sum inbmk3 no. of trades inr usd billions billions notional sum no. of trades inr usd billions billions end - march 2008 36, 556 838. 63 61, 665 6, 116 140. 31 16, 528 3. 14 end - march 2009 13, 940 348. 76 23, 732 4, 680 117. 09 11, 803 4. 68 end - march 2010 17

government ’ s decision to bring to market longer term bonds in 2005 have proved to be positive and catalytic for the local bond market as this has resulted in an extended yield curve that has provided a benchmark for pricing longer dated security issues by the private sector and banking industry. ladies and gentlemen, arising from our core responsibility for financial system stability, bank of zambia is deeply concerned about the proper functioning of the local bond market, in terms of its security, liquidity, transparency and ability to withstand contagious disruptions emanating from other jurisdictions. in this regard, bank of zambia has two broad responsibilities. the first is that of enhancing the price discovery process by promoting transparency in our own policy actions. the second is that of ensuring that the banks, as providers of liquidity, perform their proper role in supporting the trading process by making sound credit decisions. we therefore applaud this initiative from the development bank of zambia and encourage the board and management not to rest on its laurels. the eyes of the outside world – local and international investors and other key stakeholders are paying close attention, and expect development bank of zambia to deliver, and inescapably so, in terms of adherence to world class corporate governance standards and ensuring safe and sound operations. on these two responsibilities, i wish to remind development bank of zambia board and management that the business world and stakeholders out there today do not hold two different sets of standards for effective corporate performance, a set for private sector businesses and another for state owned enterprises. ladies and gentlemen, we similarly welcome the role of financial advisors and intermediaries such as standard chartered played in bringing to market of this initiative. their participation brought international best practice and standards to this landmark transaction which we expect will have a developmental impact on the local bond market. it is also our expectation that other intermediaries will look to this initiative to motivate them to seek to do more in this area for the benefit of our economy. so, in conclusion, what we as bank of zambia can do is to understand the dynamics of the debt market, how it is evolving, and whether it is sufficiently liquid and transparent. we can also help ensure that banks perform their proper role and enhance the price discovery process by promoting transparency in the conduct of our own monetary policy actions. finally, and most importantly, we can strive to help create conditions in our economy that will support sustainable, non - inflationary growth and so promote the overall welfare of all citizens. it is this is