RBI mulling retail gilts trading on bourses

The Reserve Bank of India is planning to allow retail trading in government securities on the stock exchanges to widen the market.

"The proposal is about permitting retail trading in government securities in a manner similar to that in equities," an official statement issued by the central bank said on Thursday.

The securities are currently traded only on the wholesale debt market segment on the National Stock Exchange and the RBI's Negotiated Dealing System.

The central bank now plans to allow screen-based retail trading on Bombay Stock Exchange, National Stock Exchange and the OTC exchange.

The central bank said in a statement that it was inviting comments from the public on the operational guidelines including:

• A T+3 rolling settlement cycle; and
• A mark-to-market margin, along with exposure norms calculated on the basis of worst case volatility on the zero coupon yield curve, which currently works out to about 15 per cent.

Earlier this year, the central bank said it was reserving 5 per cent of the notified amount at all primary debt auctions for pension funds, charitable trusts and retail bidders.