The Finance Minister in his recent budget speech acknowledged the need for deep and liquid debt markets and proposed many initiatives for their development. As the Industry organization for these markets, FIMMDA has a critical role to play in translating this vision into reality. FIMMDA wishes to further the following initiatives this year:

As part of its objective of developing the fixed income markets, FIMMDA is creating benchmarks. The valuation methodology for SLR securities is already established and is being used by the market. The methodology for valuation of non-SLR securities has been finalized and put out to the market participants for Member Area. It is intended that this methodology would be used for the year-end valuation of non-SLR securities on 31st March 2001.

FIMMDA would now like to encourage market participants to use these benchmarks in a variety of other ways like swap calculations, index computations and development of performance metrics. For this purpose, it is proposed to start publishing the FIMMDA-PDAI Gilt curve on a daily basis and also use the curve to publish benchmark constant maturity rates for the 1, 3, 5, 7 and 10 year segments. It is also planned to generate FIMMDA-PDAI bond indices for the short, medium and long tenors and a composite index as well.

Training and Certification

FIMMDA also sees a critical role for itself in increasing the skill base of its participants. FIMMDA has tied up with NCFM (NSE) for a certification examination titled as 'FIMMDA-NSE Debt Markets (Basic) Module'.

A training program has already been finalised. For details click here for 'Training' and 'Certification'

Risk Management

As part of its objective of introducing best practices among its members, FIMMDA is in the process of developing guidelines for management of market risk and operational risk. The Reserve Bank of India has asked FIMMDA to suggest guidelines for calculation of Risk Capital for market risk of trading portfolios of banks and Primary Dealers. FIMMDA is hence working on evolving a Value-at-risk based model for calculation of the risk capital.

Primary Markets

In the fresh CP guidelines issued by RBI some time back, FIMMDA has been assigned the job of drafting operational procedures and documentation, taking into account the international best practices. FIMMDA has studied the CP issuance practices prevailing in the US and the UK markets and after deliberating with various market participants, CP issuers and the Bombay Chambers of Commerce, draft recommendations have been submitted to the RBI. FIMMDA is looking to finalise its recommendations after getting the response from RBI.

Dispute Resolution Mechanism

As an industry organization FIMMDA has a role to play as an arbiter of disputes between the market participants. It is hence working on evolving a dispute resolution mechanism for settling disputes internally.

New Products

In his budget speech recently, the Finance Minister remarked about the introduction of Strips and guidelines for securitisation. FIMMDA proposes to submit proposal on these to the Reserve Bank of India after discussions with the various market participants.

FIMMDA is also working closely with the two premier stock exchanges of the country for the introduction of exchange traded interest rate futures contracts.

Website

The FIMMDA website www.FIMMDA.org is being redesigned to create an online presence which mirrors the role that FIMMDA plays as an industry organization for the fixed income markets. This basically aims at FIMMDA being a central hub for its member institutions to interact and discuss market issues, and develop standards on the same. The goal of the site thus is to create an online community of its members to foster efficient interaction and discussion. FIMMDA'a aim is to be the top-of-the-mind recall for any statistic, information or queries related to the fixed income, money and derivatives markets.