Effective October 8, Outright Trading in Government Securities 
to be discontinued on Saturdays 

Starting October 8, 2005, there will be no outright transactions in Government securities on Saturdays, the Reserve Bank of India has announced. Government securities traded on Fridays on T+1 basis will be settled on Mondays or the next working day in case Monday is a holiday. The announcement meets a long standing demand of market participants as well as their representative bodies. 

Market participants and their representative bodies, such as, the Fixed Income Money Market and Derivatives Association of India (FIMMDA) and the Primary Dealers Association of India (PDAI) had a long standing demand for closure of the Government securities market on Saturdays. This was placed before the Technical Advisory Committee on Money, Foreign Exchange and Government Securities (TAC) at its meeting held today. The TAC discussed various operational aspects and recommended the discontinuation of outright transactions in Government securities on Saturdays. 

Accordingly, starting October 8, 2005, there will be no outright transactions in Government securities on Saturdays. Government securities traded on Fridays on T+1 basis will be settled on Mondays or the next working day in case Monday is a holiday. 

Transactions in call/notice/term money, Collateralised Borrowing and Lending Obligations (CBLO) and repos among market participants will continue to be undertaken on Saturdays as at present. Negotiated Dealing System (NDS), clearing and Real Time Gross Settlement (RTGS) system would also operate as usual. 

It may be mentioned that the stock markets and foreign exchange markets do not function on Saturdays. With discontinuation of outright transactions in government securities on Saturday, there will now be closer alignment of the various market segments in terms of business days. 

Alpana Killawala 
Chief General Manager 

Press Release: 2005-2006/378

TOP

Reserve Bank Announces Launch of Anonymous Order 
Matching Trading in Government Securities 

The Reserve Bank of India announces the launch of the electronic order matching trading module for Government securities on its Negotiated Dealing System (RBI-NDS-GILTS-Order Matching Segment, NDS-OM in short ) on August 1, 2005. 

As part of its long term objective of developing the Government securities market, the Reserve Bank had introduced the Negotiated Dealing System (NDS) in February 2002 with the broad objectives of (i) ushering in an automated electronic reporting and settlement process, (ii) facilitating electronic auctions and (iii) providing a platform for trading in Government securities on a negotiated basis as well as through a quote driven mechanism. NDS has helped in achieving paperless and straight through settlement of secondary market transactions and has brought about significant improvements in transactional efficiency and transparency. However, the trading facilities on the NDS (both negotiated and quote driven) were hardly used, largely because they were not user friendly. In order to provide NDS members with a more advanced and more efficient trading platform, and as recommended by the Working Group on Screen Based trading in Government Securities (Chairman: Dr. R. H. Patil), the NDS-OM trading module is now being introduced. NDS-OM will co-exist with the telephone based trading system as well as the exchange based trading mechanism. 

The broad features of the NDS-OM system are as follows: 

• The NDS-OM module is part of Reserve Bank's Negotiated Dealing System. 

• The use of NDS-OM trading module is voluntary and will be available in addition to the existing telephone based trading mechanism on NDS. 

• During the first phase, the NDS-OM will serve the trading requirements of all Banks, Primary Dealers and Financial Institutions regulated by RBI that hold current NDS membership. Other NDS members will be extended access in the next phase, as appropriate. The option of extending NDS-OM to non-NDS members will be examined in due course. 

• The system will be purely order driven with all orders being matched based on strict price/time priority. 

• The system will be an anonymous order matching system wherein identity of parties is not revealed before or at the time of trade. The Clearing Corporation of India Limited (CCIL) will become the central counterparty to each trade done on the system. 

• The system will allow straight-through processing (STP) and trades executed will flow straight to CCIL in a ready-for-settlement stage. 

(vii) The system will provide functionalities for order management (placing, modifying or canceling orders), trade related queries, activity log, market information and analytics. 

(viii) The system, to start with, will support dealing in all Central Government and State Government securities for T+1 settlement. The system will be further upgraded later to facilitate trading in discounted instruments like Treasury Bills. 

The Reserve Bank will disseminate information on trades done on the NDS-OM on a near real-time basis, in addition to the dissemination of information on other NDS trades as is being done currently, on its website, www.rbi.org.in 

G. Raghuraj 
Deputy General Manager 

Press Release: 2005-2006/129

TOP