The Reserve Bank of India (RBI) has served an ultimatum ordering all banks and primary dealers to become members of the negotiated dealing system (NDS) by March 31.
The central bank said no deals in the government securities market would be allowed outside the 'NDS' from the beginning of the new financial year.
At present, the negotiated dealing system, which has been in vogue since February 15, has 42 primary dealers and banks as its members.
The system has been facing teething problems since its inception and has been attributed by dealers as the main reason for low volumes in the government securities market.
Dealers, however, feel the initial hiccups will soon be corrected. The NDS was set up to facilitate transparent electronic bidding in auctions and secondary market transactions on a real time basis.
It will encompass all SGL account holders and all transactions in government securities, treasury bills, repos, call/notice money, term money, commercial paper certificate of deposits and derivatives.
Whether the new platform will facilitate on-line trading is still a matter of debate among market participants. But, they agree that the new system will facilitate SGL transactions.
In the earlier system, market participants had to submit their SGL form physically before 2.30 pm. Now the system will take care of it.
