In a bid to deepen the bond market in India, the Reserve Bank of India has granted retail investors access to its platform for trading in the secondary market for government bonds, according to a notification on the website of the central bank.
The Negotiated Dealing System - Order Matching, or NDS-OM platform, has so far been used only by institutional investors like banks and mutual funds to trade in the secondary bond market. The minimum lot size on this platform was Rs 5 crore.
The platform will make it much easier for retail investors to participate in the bond market, NS Venkatesh, executive director at Laxmi Vilas Bank said in a telephonic interview.
Earlier, retail investors could only access the secondary bond market through what is called the ‘voice market'. Here, investors would have to call a broker, who would then make trades on their behalf.
Now demat account holders with the Clearing Corporation of India Ltd. will be able to place buy or sell orders directly on the NDS-OM platform, the central bank said. It added that the objective of the scheme was ‘facilitate efficient access to the retail investor to the same G-Sec (government securities) market being used by the large institutional investor in a seamless manner'.
“The ease of doing business will incentivise people to come in (to the bond market). With the interest rate falling, it is a good time for retail investors to enter into the secondary market for government bonds,” Venkatesh said.
In a separate notification, the RBI said that retail investors could now participate in non-competitive bidding for treasury bills. Treasury bills are debt instruments issued by the government of India that have a tenor of less than one year.
According to the notification, retail investors have been allocated a maximum of 5 percent of the aggregate nominal amount of each issue. The treasury bills will be issued for a minimum amount of Rs 10,000 and multiples thereof, the central bank said.
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