The Reserve Bank of India (RBI) has allowed individual retail investors holding demat accounts to access the secondary market in Government Securities (G-Secs) via the central bank’s negotiated dealing system — order matching (NDS-OM) system effective August 16, 2016.
The secondary market in G-Secs predominantly comprised of banks, primary dealers, insurance companies, mutual funds, financial institutions and other institutional investors currently. Most of these entities, maintain their holdings in G-Secs in their subsidiary general accounts (SGL) with the Public Debt Office of Reserve Bank of India.
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, namely 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.