MUMBAI, July 2 (Reuters) - The Reserve Bank of India has allowed some small market entities to directly trade government bonds on its electronic trading platform via a web-based system to improve transparency and remove price manipulation.
The entities include small insurance companies, pension funds, provident funds corporates and co-operative banks.
Currently, such gilt account holders have to either go through custodian banks or brokers to execute their trades which often lead to delayed delivery and settlement of securities since they do not have direct accounts with RBI.
“Sometimes because these players are so small, they had to pay higher than market levels to brokers,” said a senior official at Clearing Corporation of India Ltd which is an RBI-backed body that handles trade settlement.
The official estimates about 20 percent of daily turnover to be contributed by such small market participants.
Most of the trade volume is now settled through the electronic trading platform known as NDS-OM. The new web-based platform will be known as Om-Web, CCIL said in a release. (Reporting by Suvashree DeyChowdhury)