"The success of the derivatives market is dependent on the underlying market, which has to be liquid. There have to be reforms in the underlying market as well. There should be regular issuance of government bonds across maturities to make the underlying market of interest rate futures more liquid," Sebi chairman UK Sinha said.
Sinha, who was speaking at the launch of interest rate futures (IRFs) on the National Stock Exchange, refused to take a question on media reports which said that he got a two-year extension.

Sinha said that almost 34 percent of the public bonds issued by the government were held by the banking system.
Unless they participate, any produce has little chance to succeed, he said, adding that the three earlier attempts in the last 11 years to launch these products failed.

Sinha said that the regulator is also looking into how to provide more liquidity, especially in repo market and the linkage between the currency and the interest derivatives market.
He pointed out that some of the measures the regulator has taken in the last fiscal, which led to lower volumes in the currency derivatives market, will also be looked into.

"Going forward, I would also hope RBI, Sebi and exchanges together to look at what is needed for development of corporate bond market," Sinha said.


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