Fimmda

INTRODUCTION

The Fixed Income Money Market and Derivatives Association of India (FIMMDA), an association of Commercial Banks, Financial Institutions and Primary Dealers, was incorporated as a Company under section 25 of the Companies Act,1956 on June 3rd, 1998. FIMMDA is a voluntary market body for the bond, money and derivatives markets.

HISTORY OF FIMMDA

• The Fixed Income Money Market and Derivatives Association of India (FIMMDA), an association of Scheduled Commercial Banks, Public Financial Institutions, Primary Dealers and Insurance Companies was incorporated as a Company under section 25 of the Companies Act,1956 on June 3rd, 1998.

• FIMMDA is a voluntary market body for the bond, money and derivatives markets.

• FIMMDA has members representing all major institutional segments of the market.

CONT…

• The membership includes Nationalized Banks such as State Bank of India, its associate banks and other nationalized banks; Private sector banks such as ICICI Bank, HDFC Bank, IDBI Bank; Foreign Banks such as Bank of America, ABN Amro, Citibank, Financial institutions such as IDFC, EXIM Bank, NABARD, Insurance Companies like Life Insurance Corporation of India (LIC), ICICI Prudential Life Insurance Company, Birla Sun Life Insurance Company and all Primary Dealers.

CONT…

• FIMMDA have been holding Annual Conferences every year, which provide an opportunity for market professionals from the Indian Fixed Income and Derivatives markets to discuss and interact with each other, the distinguished speakers and panelists and bring the global best practices to the Indian market.

• The conference also provides an opportunity for the delegates to network with other market participants from India and abroad, and widen their understanding and knowledge base in their specialized fields.

• The conference also provides an opportunity for the service providers of Treasuries and Treasury Products to exhibit and market their services and products.

FIMMDA’S CRITERIA

• FIMMDA membership is open to scheduled commercial banks, financial institutions, primary dealers and insurance companies.

• Membership Charges :

The FIMMDA membership fee is Rs. 200000 /- annually with a onetime registration fee of Rs. 200000 /-

Membership Base

• Public Sector Banks (26 in number)

• Private Banks (19 in number)

• Financial Institutions (09 in number)

• Insurance Companies (07 in number) Foreign Banks (27 in number)

• Primary Dealers (07 in number)

OBJECTIVES

• To function as the principal interface with the regulators on various issues that impact the functioning of these markets. 

• To undertake developmental activities, such as, introduction of benchmark rates and new derivatives instruments, etc. 

• To provide training and development support to dealers and support personnel at member institutions. 

• To adopt/develop international standard practices and a code of conduct in the above fields of activity.

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• To devise standardized best market practices. 

• To function as an arbitrator for disputes, if any, between member institutions. 

• To develop standardized sets of documentation. 

• To assume any other relevant role facilitating smooth and orderly functioning of the said markets.

Fimmda securities

• What are the securities?

• What are the fixed income securities?

• What are the type of fixed income securities?

• what is the difference between a fixed income security and equity?

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• What are the fixed interest rate securities and floating interest rate securities?

• What are the key components of fixed income securities?

• What is the yield on a security?

• What is maturity?

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• What are coupon payment?

• What are callable securities?

• What is the relationship between price and yield?

Fimmda

1)India removes trading band for govt bonds on Friday - FIMMDA :

• MUMBAI (Reuters) - The Fixed Income Money Market and Derivatives Association of India said there would be no trading bands for government bonds and other securities on Friday.

• The trading body has been removing or relaxing trading bands in recent sessions in view of the sharp volatility in government bonds.

• The government will sell 150 billion rupees of bonds later in the session which will again test the central bank's willingness to offer high yields to investors as it tries to support the rupee.

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2)VALUATION OF GOVERNMENT SECURITIES Central Government Securities, which qualify for SLR :

• The prices as well as the yield curve for all Central Government Securities are published by FIMMDA.For valuation of all other securities FIMMDA’s Par/Base Yield Curve, which is derived from the Central Government Securities yield curve should be used.

• The Par/Base Yield Curve starts from three-month tenor. The yield for three-month tenor would also be applicable for maturities less than three months.

• Central Government Securities, which do not qualify for SLRFIMMDA will publish the prices for all the Central Government Securities which do not qualify for SLR in accordance with the “Note to para 3.7.1 of RBI Master Circular for banks dated July 1, 2011” (Change)State Government SecuritiesFIMMDA will publish the prices for all the State Government Securities in accordance with “para 3.6.2 of RBI Master Circular for banks dated July 1, 2011”

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3)Reference Rates - FIMMDA-NSE MIBID MIBOR      In particular, a call money reference rate can find the following applications:•Traders can make many decisions as offsets compared with the prevailing reference rate.•Derivatives require a clearly defined reference rate as a foundation, off which the pay-off from the derivative is defined.•A variety of contracts can be structured as offsets from the future levels of a reference rate. The simplest example may be a floating rate bond that uses an interest rate which is a given 'n' offsets above a given reference rate.

SWOT ANALYSIS

STRENGTH1)LARGE SUPPLY OF SECURITIES Enabling creation of benchmark securities with sufficient outstanding stock

2)STATE OF ART A)electronic bidding B)faster processing C)flexibility to dispose of securities on same day

3)CLOSE COORDINATION A)debt and monetary management B)monetary and fiscal policies

2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-100

1000000

2000000

3000000

4000000

5000000

6000000

7000000

Growth in Outright and repo settlement volumes (in Rs. Crore)

G-sec Repo

WEAKNESS

1)FISCAL DOMINANCE

2)SHORT SELLING

38%

9%

0%

22%

0%

3%0%

3%

1%

7%

12%

4%

Holder Profile in Central Govt securities as on end Mar 2010

1. Commercial Banks2. Bank- Primary Dealers3. Non-Bank PDs4. Insurance Companies5. Mutual Funds6. Co-operative Banks7. Financial Institutions8. Corporates9. FIIs10. Provident Funds11. RBI12. Others

THREATS

1)PRESSURE FOR RUPEE DOLLAR EXCHANGE RISK

2)LOW MONEY MARKET

OPPORTUNITIES

1)INNOVATION AND INTRODUCE NEW PRODUCT

2)MARKET GOVERNMENT SECURITIES AS ANOTHER PRODUT FOR INVESTMENT