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Friends,

I am thankful to the Fixed Income Money Market and Derivatives Association of India (FIMMDA) and Primary Dealers Association of India (PDAI), the organizers, for inviting me to deliver the keynote address today. I have had the pleasure of being closely associated with FIMMDA and PDAI since their inception.
Reserve Bank of India has been taking active interest in the development of fixed income markets and the role of FIMMDA is becoming increasingly important in this regard. It has played a pivotal role in the design of documentation of repos, Commercial Paper and Certificate of Deposits, finalizing the daily/annual valuation methodology for fixed income securities. RBI consistently seeks its views on various G-Sec market related issues. It is also involved in standardization of market practices for fixed income securities/money market instruments/fixed income derivatives. It has been emphasizing the importance of best practices in the OTC interest rate derivatives market and has circulated a Guidance Note for Best Practices to its members in this regard. We, in the RBI, understand the need for continued collaborative relationship with FIMMDA and PDAI. It is in this spirit that I look forward to the deliberations today in the sixth Annual Conference being organized jointly by FIMMDA and PDAI.

I am somewhat reluctant to elaborate on the subject of the day, namely, the road map of fixed income and derivatives market, in my keynote address for several reasons. My views in this regard were articulated in a seminar and then published in a BIS paper titled "Issues and challenges in the development of the debt market in India". The subject was subsequently updated, elaborated and improved upon comprehensively by my friend and former colleague Dr. Rakesh Mohan, when he addressed this gathering last year in Dubai. Dr. Mohan has already indicated the "Road Ahead", which I fully endorse. Moreover, one should wait for free and frank discussion on the subject in this conference, in which distinguished persons with several perspectives are participating. Let me assure you that we in RBI do look forward to the deliberations of this conference and the suggestions made will be, to the extent possible, examined by the various Technical Groups in the RBI that have been set up recently. It is our intention to place the reports of the Groups on Money Market, Government Securities Market and Forex Market in the public domain soon. Hence, the subject of the Sixth Annual Conference is both well-timed and significant for us.

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* Inaugural Address by Dr. Y. V. Reddy at the Fixed Income and Money market & Derivatives Association of Indian and Primary Dealers Association of India delivered on March 11, 2005 at Mumbai.