NSDL launches facility for retail trade in G-secs

To encourage retail investments in government securities (G-secs), National Securities Depository Ltd (NSDL) has initiated a facility for individual account holders to trade in such financial instruments.

The facility allows retail investors holding demat accounts with bank depository participants of NSDL to deal in G-secs through the negotiated dealing system-order matching NDS-OM platform, operated by Clearing Corporation of India (CCIL) on behalf of the Reserve Bank of India (RBI).

This facility was made operational on Tuesday and the first trade for a retail client was executed by HDFC Bank, a bank depository participant of NSDL and also NDS-OM member.

The move is in line with announcement by the RBI in its first bi-monthly monetary policy statement of 2015-16 to provide demat (dematerialised) account holders the functionality to put through trades on NDS-OM.

In July 2016, the RBI had issued guidelines to allow demat account holders to put through trades in G-secs on the NDS-OM platform through their bank depository participant (DP) which is a subsidiary general ledger (SGL) account holder and a direct member of NDS-OM and CCIL.

So far, access for trading in secondary market on NDS-OM was limited to those maintaining SGL/constituents' subsidiary general ledger (CSGL) accounts.

"These new guidelines will now facilitate efficient access for retail investors holding demat accounts to the Government securities market and encourage retail participation," NSDL said in a statement.

Further, the depository said it has integrated NDS-OM web module with e-services facility to make the process easier for retail investors.

It added, "It allows the bank DPs to make available web trading facility to investors so that investors can directly trade online in government securities using the web module of NDS-OM and their existing NSDL demat account."

NSDL managing director and chief executive officer G V Nageswara Rao said, "This facility will encourage retail investors to invest in Government securities. NDS-OM is the most liquid market for Government securities and NSDL demat account holders now have access to the same. There is no need for investors to open separate demat account for holding government securities and their existing demat account can be used."

He said that investors would be able to view and track G-secs through NSDL's consolidated account statement.

NSDL holds over 89 per cent of the demat securities held in the country. It holds securities worth over Rs 130 lakh crore (USD 1.9 trillion), which is larger than GDP of 180 countries, NSDL said.

Central Depository Services Ltd is the other depository in India.