Physically delivered government bond futures contracts to enable investors to better manage interest rate risks, increase depth in debt securities market
Turkiye’s stock exchange Borsa Istanbul on Tuesday launched physically delivered government bond futures contracts to be traded on the derivatives market.
The underlying assets of the government bond futures contracts will be government debt securities with a maturity of 2023, 2026 and 2030, according to a statement by Borsa Istanbul.
They have been selected as 2-year, 5-year and 10-year indicative securities which have the ability to represent the market and high liquidity within the market making system in government debt securities.
The new product will enable the financial sector and institutional investors to manage their interest rate risks more effectively, increase the depth in the debt securities market by ensuring the interaction between the spot/futures market, and create more efficient prices.
These contracts will be settled with the physical delivery of the relevant government bond futures contracts at the end of the maturity and Takasbank will serve as the central counterparty.
Government bond futures contracts will appeal to corporate and individual investors, who, in addition to banks, have a bond portfolio and want to hedge against changes in market interest rates.