The potential for developing bond futures contracts on Malta Government stocks

Abstract

Interest in MGS market has increased since trading on the MSE started in 1992. Although government bonds tend to be considered as riskless securities, they are in fact subject to interest rate risk. Bond futures contracts are then useful derivative instruments for hedging the interest rate risk faced when investing in government and corporate bonds. The objective of this dissertation was to determine the potential for developing bond futures contracts based on MGS. Based on interviews held with various financial institutions, the study attempted to determine: e whether the local interest rate environment justifies the introduction of bond futures contracts;