The National Stock Exchange (NSE) has received a No Objection Certificate (NOC) from the Securities and Exchange Board of India (SEBI) to launch futures contracts linked to a Corporate Bond Index.

The proposed contracts would give investors and other market participants a listed instrument to take or hedge exposure to the corporate bond market. The product is also intended to improve price discovery and provide a way for participants to manage risks associated with their corporate bond portfolios.

The launch is not immediate, however. NSE said the product will require the requisite approval from the Reserve Bank of India (RBI) before it can be introduced.

These are derivative contracts whose value is linked to an index of corporate bonds. Rather than buying or selling individual debt securities, market participants can use the futures to manage their exposure to movements in the corporate bond market.

The key significance of the proposed product is the additional risk-management tool it could provide to participants in the corporate bond market.

For example, investors holding corporate bonds could use the futures to hedge against adverse market movements without necessarily having to sell their underlying bond holdings. The contracts could also help participants manage risks while making markets in corporate bonds.

NSE said the product could support "risk management, portfolio hedging and price discovery" and contribute to the development of a wider corporate bond derivatives ecosystem.

Sriram Krishnan, Chief Business Development Officer at NSE, said the SEBI NOC marked "an important milestone in the evolution of India's fixed income markets".

He said a stronger derivatives market could support the underlying bond market through more efficient risk transfer and greater participation from institutions.

The proposal comes as the corporate bond market assumes a larger role in corporate financing. Indian companies raised a record Rs 4.07 trillion through bonds in the first four months of FY26, according to Reuters.

For NSE, the proposed futures are part of its effort to expand exchange-traded products for fixed-income markets. The next key step is RBI approval, following which the exchange can move towards introducing the contracts.