The bank tied up with an international bonds specialist Tyndall Corporation in Australia to get expertise for the venture.rn
rnThe bank will initially pool US$ 16 mn or one forth of its foreign currency deposits into an offshore fund for the operation.rn
rnTyndall says futures and options trading will help the bank get a higher return irrespective of whether bond yields go up or down.rn
rnldblquote Using globally traded futures and auctions gives a flexibility to the fund to add value in either direction -whether the market is falling or rising,
dblquote Felix Stephen, International Bond & Currency Manager of Tyndall says.rn
rnldblquote But remember that whatever the process of adding value also has a risk element to it. So what we have added are risk constraints to contain the funds to accepted limits to deliver what the fund hopes to get.
rnThe company says that the local market also has potential for a futures market in government debt considering the huge debt stock already in circulation.rn
rnldblquote What you need is a futures exchange or something like that to complement the structure that is already in place in terms of physical government bond trading- at some stage to your equity market. rn
rnldblquote Remember that this just another side to the physical bond portfolio. It adds depth to the market and helps develop,
dblquote he says.rn
Seylan Bank said it would play the futures and options market in international bonds to raise returns on its dollar deposits.