INDIA: NSE Launches the First Dedicated Debt Platform on the Exchange

Wednesday May 15 2013

India`s first dedicated debt platform was launched by the National Stock Exchange on 13 May 2013.

The Debt segment will provide an opportunity to retail investors to invest in Corporate bonds on a liquid and transparent exchange platform, will help Institutions who are holders of Corporate bonds an ideal platform to buy and sell at optimum prices and help Corporates to get adequate demand, when they are issuing the bonds.

NSE had recently received approval from SEBI to launch the Debt segment. there will be two platforms in the Debt segment, the retail platform and the Institutional platform, where the lot sizes will be low as one bond for retail investors (up to a ceiling of 1 crore value), while institutions can trade in lots sizes of 1 crore (Institutional odd lot) and its multiples and 5 crore (Institutional normal lot) and its multiples. While publicly placed Corporate bonds will be listed for trading in the retail platform, the privately placed Corporate bonds will be listed on the Institutional platform. Institutions can also buy and sell publicly placed Corporate bonds.

Corporate bonds provide stable returns, making it an attractive product for retail investors, who are unable to trade in the OTC or over the counter market. Now retail investors can trade on the debt segment, where prices will be determined through market dynamics by anonymous order matching, just like they are determined for shares.

All existing Members of NSE can take membership of the segment, without any fresh deposits. They will only have to pay one lakh rupees, as a contribution to the settlement guarantee fund.

For the retail platform, a uniform margin rate of 10% will be applicable on debt instruments with a rating of AA or above (or with similar rating nomenclature) by recognized credit rating agencies and 25% for all other debt instruments.

While the order books for the retail platform and institutional platform will be different, the settlement for the two platforms will also be different. For the retail platform, settlement will be on T + 2, netting between securities will be allowed and there will be a settlement guarantee, while for the institutional platform, settlement will be on T + 1, on a trade for trade basis.

Click on the above link for more details