Futures markets brace up for T-bills

The secondary T-bills market, subject to so many controversies ever since the beginning, is already luring the brokers on the futures markets into play. Although this market is not regulated yet, the management of each of the two futures rings, namely the Financial-Monetary and Commodities Exchange and the Romanian Commodities Exchange, announced that these institutions would participate directly in this market, because they wanted to trade derivative tools based on the T-bills interest.

The Sibiu-based Financial-Monetary and Commodities Exchange (BMFMS) at the end of last week announced it would enter the T-bills derivative market, thus supporting the intentions of the capital market representatives, of the Finance Ministry and of the NBR to create a secondary T-bills market.

According to BMFMS management, the Sibiu-based Exchange has projects already running in order to implement derivative tools: futures and options based on the interest rates traded on the secondary market.

BMFMS’s research and development team, helped by a team of American specialists, has almost completed an analysis of the practical possibilities to introduce the new range of financial products in the electronic trading platform and is conducting market research to ascertain the extent of receptivity and implementation among those requesting such complex investment forms.

“We are conducting these analyses to be ready to launch T-bills derivatives at the right time. We are hoping to see the T-bills derivative market become operational by the end of Q3 this year, but this is mainly up to the development of the secondary T-bills market,” the BMFMS president Teodor Ancuta said.

The regulation of the secondary T-bills market was necessary, as it has good development prospects and is the most dynamic financial segment in the world in terms of liquidity and high traded volumes, according to Ancuta.

Liliana Paraipan, marketing and development manager of the Romanian Commodities Exchange (BRM), is more optimistic about the trading of such derivatives, though.

“One of BRM’s goals for this year is introducing T-bills derivatives, but let’s not forget that as long as there is no such market, we are practically talking about something that it’s not there. Neither the direct participants on this market have too much to say now when we don’t even know how it is supposed to operate. Let’s wait and see the secondary T-bills market going and then release products,” Liliana Paraipan says.

In case T-bills will be possible to trade on the futures market, the object of the futures contracts will be their interest.

The public securities market is one of the biggest businesses there is, because of the high amounts of money involved, which exceed billions of dollars. The fiercest fight is the one for the place to trade those securities.

The National Securities Commission (CNVM) wants it to be the Stock Exchange, but the Finance Ministry and NBR do not fully agree.

The banks have been the top players on this market so far, while the securities companies will have to meet minimal capital requirements to gain access on this market.