The Reserve Bank of India has decided to allow non-bank brokers registered with SEBI to directly access the Negotiated Dealing System – Order Matching (NDS-OM), which is an electronic trading platform for secondary market transactions in government securities (G-sec).
“Access to NDS-OM is, at present, available to regulated entities and to the clients of banks and standalone primary dealers. With a view to widening access, it has been decided that non-bank brokers registered with SEBI can directly access NDS-OM, on behalf of their clients,” the RBI said. “These brokers may access NDS-OM subject to the regulations and conditions laid down by the Reserve Bank in this regard. Necessary instructions are being issued separately,” it added.
Pro retail investor move
According to Venkatakrishnan Srinivasan, founder, Rockfort Fincap, the RBI’s move will help bridge the gap between small investors and government bonds, potentially leading to more active trading and better price discovery, especially for smaller trade sizes.
“The increased access through brokers should make it easier and cheaper for regular investors to buy government bonds. However, retail investors will need proper education about how bond markets work, especially understanding how bond prices move in opposite direction to interest rates,” he said.
ICRA Ratings Vice-President Deep Inder Singhshared similar views, saying the measure will enhance the ease of exit for retail investors in government securities, thereby boosting their overall liquidity. With this improved liquidity, the rating agency anticipates greater interest from retail investors in government securities, especially if brokers integrate their trading platforms with NDS-OM.
