Derivatives Desk

Key Features of Derivatives Desk

Swap Classification

  • Fixed to Floating: The customer receives cash flows at a fixed rate of interest and simultaneously pays cash flows at a floating rate of interest or vice versa. The cash flows are calculated on a Nominal Principal amount. The floating interest rate is usually determined by reference to a transparent benchmark.

  • Floating to Floating: Both the counterparties exchange interest amounts based on two different floating reference rates through the swap's life.

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Dealing

  • The trade date is the date the counterparties agree on the swap conditions. 

  • The effective date is the date the swap becomes effective, i.e., when the interest obligations start to accrue.

  • The maturity date is the date the swap stops accruing interest and terminates.

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Quotation

  • Market quotations for swaps are usually quoted against standard benchmark/index rates and non-amortising national principal, free from the margin payable in the cash market by the relevant counterparties. 

  • The rate is thus quoted flat, and any amortising structure that envisages a customised rate is adjusted accordingly.

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Exceptional Expertise In Rupees Derivatives Market

  • The HDFC Bank Derivatives Desk has earned a stellar reputation for its rupee derivatives operations.

  • We are one of the most aggressive players in this market segment. The desk leverages the bank's large balance sheet and market presence to provide corporate customers with a unique advantage in rupee derivatives. We meet our customers' needs through active market marking and trading.

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Eligibility

  • In the case of the Rupee, IRS banks, primary dealers and financial institutions can enter swaps to hedge their exposure and make market moves. 

  • Other corporate customers can enter Rupee IRS ONLY to hedge the interest rate risk on an underlying asset/liability.

  • In the case of non-Rupee IRS, all participants are allowed to enter these transactions only to hedge an underlying exposure.

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Frequently Asked Questions

HDFC Bank’s Derivatives Desk is a specialised service that actively mitigates currency and interest rate risks for companies. It offers a broad portfolio of products, including plain vanilla and exotic derivatives, such as second-generation exotics. 

A trading desk is a specialised area within a financial institution where transactions for buying/selling securities are executed. It is staffed by professionals who may trade for their own accounts or act as brokers, facilitating trade in different types of markets, such as equities, fixed income, forex, commodities, and derivatives.

The Derivatives Trading Desk at HDFC Bank offers a robust suite of products designed to manage currency and interest rate risks actively. Customers can benefit from a broad portfolio that includes interest rate swaps, caps, floors, short-dated and long-dated currency options and cross-currency swaps embedded with options and swaptions.

An example of a trading desk setup includes a derivatives trading desk that focuses on buying and selling options and futures contracts.