Asia Index Private, a joint venture between S&P Dow Jones Indices and the Bombay Stock Exchange, has launched the S&P BSE Liquid Rate Index, an index designed to measure the returns from a daily rolling deposit at the collateralized borrowing and lending obligation (CBLO) rate in India. The index has been designed to act as a reference for investment products, such as exchange-traded funds, for both retail and institutional investors.

Alka Banerjee, CEO, Asia Index Private Limited.

A CBLO is a money market instrument that represents an obligation between a borrower and a lender as to the terms and conditions of the loan. They are generally used by those who have been phased out of or heavily restricted in the interbank call money market.

These instruments are used by bankers and corporate treasury managers to park excess cash for a short period, maybe overnight, to earn some income or interest without compromising the security of the funds.

The index is calculated using the CBLO rate for transactions maturing on the following business day and with settlement required on that day (ie: T+0). Rates used are provided by the Clearing Corporation of India (CCIL), who provides a guarantee on settling CBLO trades, thereby adding security to the transaction.

Alka Banerjee, CEO, Asia Index Private, commented: “As the Indian fixed income market is maturing, investors are seeking a tool to measure the performance of CBLO rates over a period of time. With the launch of S&P BSE Liquid Rate Index we are expanding our fixed income indices offering in the most actively traded instrument in the money market. The CBLO rate is considered one of most liquid rates in India, in the overnight segment.”

The S&P BSE CBLO Index is calculated only on those days when both BSE and CCIL are open.