RBI in talks with global platforms for govt bond trades, say sources

Mumbai: The Reserve Bank of India is in talks with three major global electronic trading platforms for an arrangement allowing foreign investors to trade Indian government bonds through them, three sources with direct knowledge of the matter said on Friday.

The central bank is in talks with Bloomberg, Tradeweb and MarketAxess to provide an interface that would allow foreign investors to access local bond markets using these platforms.

The RBI and clearing house Clearing Corp of India (CCIL) did not immediately reply to Reuters' request seeking comments.

"Foreign investors have been in discussion with the central bank as all of them are not registered in India, and with the inclusion of Indian securities just four months away, they may not be able to complete the registration procedure in time," one of the sources said.

Bond trading volumes are set to rise in the country with the inclusion of some Indian bonds in JPMorgan's emerging market debt index in June. India's weightage in the index would increase to 10 per cent by March 2025.

Since the announcement in September, foreign investors have bought around Rs 70,000 crore ($8.44 billion) of government bonds on a net basis, but most investments were undertaken by large investors directly or via foreign banks.

"The major issue is for passive investors who will have to increase exposure to local bonds on a monthly basis," said a trader with a foreign bank. "It would be cumbersome (for them) to go through the current local trading system."

Currently, local government bonds are traded through the NDS-Order Matching platform operated by the CCIL.

Market participants, especially custodian banks that handle foreign clients, have made recommendations to the CCIL for developing an interface that would provide seamless trading.

The settlement of these trades would happen on CCIL, and so the market remains hopeful of the new arrangement's execution.

"Large foreign banks have had consultations and are nudging the central bank to undertake the link, and the RBI may come out with it soon," another trader added.

($1 = 82.9060 Indian rupees)