Reddy said a technical advisory committee on government securities market is looking into various aspects of expansion of the repo market including legal status, regulatory framework, standardisation of accounting practices etc.

Draft proposals for introducing interest rate swaps would be the main item of agenda at the meeting of the Standing Committee on Money Market on Wednesday, he said. The monetary policy of October 1998 had announced the intention of introducing interest rate swaps to further deepen the money market and also enable market participants to hedge interest rate risks.

On Narasimham Committee recommendation on LiquidityAdjustment Facility (LAF) by way of continuous presence of RBI in the money market for providing an effective interest rate corridor, Reddy said that RBI was studying all the issues involved in the introduction of LAF.

On an electronic dealing system, Reddy said that RBI is actively coordinating with Primary Dealers Association in developing an electronic dealing system to facilitate dealing in call, notice and term money, treasury bills, government securities and repos. The system which lends transparency and efficiency to market operations is expected to be operationalised by March 1999, he added.