Retail investors can access the Government securities (G-Sec) market, being used currently by the large institutional players, in a seamless manner from August 16, the Reserve Bank of India said on Thursday.
The secondary market in G-Sec predominantly comprises banks, primary dealers, insurance companies, mutual funds, financial institutions and other institutional investors. Most of these entities maintain their holdings in G-Secs in their Subsidiary General ledger (SGl) with the Public Debt Office of the Central Bank. RBI aims to facilitate efficient access to the retail individual investor to ‘the same G-Sec market being used by the large institutional investor in a seamless manner’.
“It has been decided to allow Demat Account Holders of NSDl and CDSl to put through trades in Government Securities on the NDS-OM platform through their respective Depository Participant (DP) bank which is an SGl Account Holder and a direct member of NDS-OM and CCIl,” RBI said.
An Implementation Group was constituted to recommend specific measures to enable seamless movement of securities from SGl form to demat form and vice versa and to provide demat account holders a functionality to put through trades on Negotiated Dealing System – Order Matching (NDS-OM).
Taking into account the recommendations of the Group, RBI said the Clearing Corporation of India (CCIl) was advised to put in place necessary arrangements in coordination with the depositories viz NSDl and CDSl to enable demat account holders to trade on NDS-OM.
“Further operational details of the Scheme will be issued by CCIl separately. The guidelines shall be effective from August 16, 2016,” the Central Bank said in a statement. Primary members of NDS-OM who are also Depository Participants can grant demat account holders access to the NDS-OM Web Module for placing buy/sell orders directly on NDS-OM.
Individuals holding demat accounts can instruct their Depository Participants to place orders on their behalf. RBI said that primary members would ensure that demat account holders do not place sell order without sufficient balance of securities in the demat account.
Meanwhile, with a view to encouraging wider participation and retail holding of Treasury Bills, the Government, in consultation with RBI, has extended the non-competitive bidding facility to the individuals. For retail investors, the allocation will be restricted to a maximum of 5 per cent of the aggregate nominal amount of the issue, the RBI said in another notification.
The bills will be issued for a minimum amount of Rs 10,000 and in multiples of Rs 10,000 thereof. The auction system of RBI (e-kuber) has been configured to enable retail participation in T-Bill auctions, RBI said, adding the facility would be operationalised with effect from August 3.