STCI Primary Dealer Ltd.
You are here -> Markets ->Interest Rate Derivatives
  Interest Rate Derivatives 

An interest rate derivative is a instrument where the underlying asset is the right to pay or receive a (usually notional) amount of money at a given interest rate.

The interest rate derivatives market is the largest derivatives market in the world. Market observers estimate that $60 trillion dollars by notional value of interest rate derivatives contract had been exchanged by May 2004. The interest rate derivateves permitted by regulatory guidelines in India include Interest Rate Swaps and Interest Rate Futures.

Interest rate derivatives are used in the following broad areas:

  • Hedging exposures: adding greater certainty, and replacing risks normally associated with interest rate and currency exposure.

  • Raising capital: reducing the cost of capital by exploiting funding differentials between countries, currencies and funding sources.

  • Investing: allowing users to express their market views efficiently, enhancing yield and achieving portfolio objectives.

     

    		•

    Next
    News
       Useful Links
    >>
    >>
    >>
    >>
    >>
    Government Securities Market
    Corporate Bonds Market
    Interest Rate Derivatives

    Disclaimer