Main Note - [[G-Secs-Secondary Market#2.1 Outright Transactions|Trading of G-Secs in Secondary Market]] **This is a note on outright transactions in G-Secs between market participants in the secondary market.** 1. The the direct buy/sell of government securities in secondary market can be done through: 1. OTC - Over-the-Counter (OTC) markets are markets where transactions are undertaken in any manner other than on stock exchanges and shall include transactions undertaken on [electronic trading platforms](https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=11385&Mode=0) 1. NDS-OM *(electronic trading)* 1. Direct access to NDS-OM for primary members, 2. Indirect Access (orders placed by Direct Members) to NDS-OM, 3. Indirect Access (orders placed directly) on the web module called [NDS-OM-Web](https://www.rbi.org.in/CommonPerson/english/scripts/FAQs.aspx?Id=987) for gilt account and (also demat account holders since July 28, 2016) holders, 4. Direct Access to [NDS OM Retail](https://rbiretaildirect.org.in/) (Retail Direct Platform, *available for both primary auction and secondary market*) 2. bilateral (voice) trades outside NDS-OM and *reported on NDS-OM*, 2. [Stock exchanges](https://www.rbi.org.in/commonperson/English/Scripts/FAQs.aspx?Id=711#:~:text=on%20specific%20request.-,iv.%20Stock%20Exchanges,-8.6%20As%20advised) ## OTC ### NDS-OM (*Electronic Trading*) 1. FAQs on [NDS-OM](https://rbi.org.in/scripts/FAQDisplay.aspx?Id=86) 2. Negotiated Dealing System-Order Matching (NDS-OM) is an anonymous online (electronic) screen based order-matching (order-driven) trading platform/system for secondary market trading in Government securities, with guaranteed settlement via CCIL 3. The NDS-OM ensures complete anonymity among the participants and brings transparency in secondary market transactions in Government securities. The NDS-OM facilitates Straight-Through-Processing (STP) as all the trades on the system are automatically sent to CCIL for settlement. With the efficiency and ease of its operations, the NDS-OM today accounts for around 90 per cent of the trading volume in government securities. 4. It is owned by RBI, but hosted, maintained and operated by the Clearing Corporation of India Limited (CCIL) on behalf of RBI. 5. It is part of [Oversight of Payment Systems](Oversight%20of%20Payment%20Systems.md). 6. These are outright transactions between market participants ==(and sometimes RBI)== on CCIL's NDS-OM software. 7. April 30, 2001 - CCIL was incorporated. 8. 2003 - Inter-bank repo (market repo) in G-Secs was introduced. The trading was bilateral and phone-based, and reporting was done RBI's NDS, and clearing & settlement was done via CCIL. 9. February 15, 2002 - CCIL commenced clearing and settlement of market trades in Government Securities (reported on) co-terminus with operationalisation of Reserve Bank of India’s Negotiated Dealing System (NDS). 10. April 10, 2002 - CCIL extended facility of guaranteed settlement (as the Central Counterparty-CCP) for trades in Government Securities 11. 2003 - Inter-bank repo (market repo) in G-Secs was introduced. The trading was bilateral and phone-based, and reporting was done RBI's NDS, and clearing & settlement was done via CCIL. 12. ==August 1, 2005 - NDS-OM was launched.== 1. It was initially allowed to [commercial banks](Types%20of%20Banks.md#^890407) and primary dealers ([PDs](Primary%20Dealers%20(PDs).md)) but later extended to other NDS members such as insurance companies, mutual funds and bigger provident funds. 2. In addition to the direct access, indirect access through Constituent Subsidiary General Ledger (CSGL) route was permitted from May 2007 to select category of participants, viz., deposit-taking NBFCs, provident funds, pension funds, mutual funds, insurance companies, cooperative banks, regional rural banks and trusts. 3. Nov, 2007 - With effect from this date, the CSGL facility was extended to the Systemically Important Non-Deposit taking NBFCs (NBFC-ND-SI). 4. May, 2008 - Access to the CSGL facility on NDS-OM was further extended to other non-deposit taking NBFCs, corporates and FIIs. 5. These entities were allowed to place orders on NDSOM through direct NDS-OM members, viz., banks and PDs, using the CSGL route. Such trades were settled through the CSGL account and current account of the NDS-OM member. [^1] 13. It has [substantial advantages](https://www.rbi.org.in/upload/Publications/PDFs/58852.pdf) like: 1. anonymity, 2. better access, 3. quicker trade execution, 4. improved pre and post trade transparency, 5. reduction in trading costs, more efficient price discovery, 6. straight through processing and 7. improved market liquidity. 14. ==**Participation**== 1. **Direct Access to NDS-OM** *(Not for Retail)* 1. Banks, well managed and financially sound UCBs, NBFCs, Primary Dealers, Insurance Companies, Mutual Funds etc. i.e entities who maintain SGL accounts with RBI, are allowed to become member (have direct access) of [NDS-OM](https://www.rbi.org.in/commonman/english/scripts/FAQs.aspx?Id=711#:~:text=exchanges%20(para%208.6)-,i.%20NDS%2DOM,-In%20August%202005). These are also called Primary Members (PM) of NDS. 2. So this route is not for individuals. 3. They can maintain both a SGL (for their trades) and a constituent account in terms of the SGL Account (CSGL, for their clients) in terms of [Subsidiary General Ledger Account: Eligibility Criteria and Operational Guidelines](RBI_20210922_Subsidiary%20General%20Ledger%20Account-%20Eligibility%20Criteria%20and%20Operational%20Guidelines.pdf) dated Sept 22, 2021. 2. **Indirect Access (orders placed by Direct Members) to NDS-OM** *(Retail allowed)* 1. Gilt Account (*CSGL route*) - Other participants can access this system through their custodians i.e. with whom they maintain Gilt Accounts. In other words, Gilt Account Holders which have gilt account with the Direct Members are permitted to have indirect access to the NDS-OM system i.e they can request their Primary Members to place orders on their behalf on the NDS-OM system, or by taking membership of [NDS-OM web](https://www.rbi.org.in/CommonPerson/english/scripts/FAQs.aspx?Id=987) through their respective Direct Members. 1. A Gilt Account is a form of dematerialized account for securities maintained with a scheduled commercial bank or PD. The proprietary transactions in G-Secs undertaken by Direct Members are settled through SGL account maintained by them with RBI at PDO. The transactions in G-Secs undertaken by Gilt Account Holders (GAHs) through their Direct Members are settled through Constituent Subsidiary General Ledger (CSGL) account maintained by Direct Members with RBI at PDO for its constituent. 2. Individuals are also allowed to open GILT accounts. 2. Demat Account (*Depository route*) - Indirect access to NDS-OM by the retail segment, comprising of individual investors having demat account with depositories viz. NSDL and/or CDSL, desirous of participating in the G-Sec market is facilitated by allowing them to use their demat accounts for their transactions and holdings in G-Sec. This access would be facilitated through any of the existing NDS-OM primary (direct) members, who also act as Depository Participants for NSDL and/or CDSL. 1. [July 28, 2016](RBI_Notification_20160728_Retail%20Participation%20by%20Demat%20Account%20Holders%20in%20the%20Government%20Securities%20Market-%20Access%20to%20NDS-OM%20Platform.pdf) - RBI allowed individual investors having demat accounts to place orders on NDS-OM through their Depository Participant (DP) bank which is an SGL Account Holder and a direct (primary) member of NDS-OM and CCIL. 2. [Feb 7, 2025](RBI_Directions_20250207_Master%20Direction%20-%20Reserve%20Bank%20of%20India%20(Access%20Criteria%20for%20NDS-OM)%20Directions,%202025.pdf) - RBI allowed direct access to non-bank stock brokers (registered with SEBI) on NDS-OM, which allowed individual investors having demat account CDSL/NSDL ([SEBI registered depositories](https://www.sebi.gov.in/depositories.html)) indirect access to NDS-OM 3. **Indirect Access (orders placed directly on NDS-OM Web)** *(Retail allowed)* 1. [June 29, 2012](RBI_Press%20Release_20120629_RBI%20implements%20Web-based%20Online%20Trading%20Module%20in%20G-Secs%20by%20Gilt%20Account%20Holders.pdf) - NDS-OM Web was launched to enhance the indirect access by allowing GAHs to directly place their order/bid feed on NDS-OM Web module, subjected to controls by Primary Member/Direct Members. 2. FAQs on [NDS-OM Web](https://rbi.org.in/scripts/FAQView.aspx?Id=86) Module 3. [FAQs on NDS-OM](https://rbiretaildirect.org.in/#/FaqNdsOmSecondaryMarket) 4. Both GILT and (demat account *since July 2016*) holders can access the NDS-OM Web. 5. [STEPS](RBI_STEPS%20involved%20in%20the%20entire%20process%20of%20concluding%20a%20trade%20on%20web%20based%20OM_FAQ_NDS-OM%20Web.pdf) involved in the entire process of concluding a trade on web based OM 6. [Oct 20, 2016](RBI_Notification_20161020_NDS-OM%20Web%20Module%20–%20Access%20to%20Gilt%20Account%20Holders%20(GAHs).pdf) - Direct Members (PMs) have to compulsorily offer NDS-OM Web to their GAH (excluding individuals). For individual GAHs desirous of the NDS-OM web facility, the web access is provided based only on specific requests. 7. [Oct 20, 2016](RBI_Notification_20161020_Participation%20of%20Foreign%20Portfolio%20Investors%20(FPIs)%20in%20Government%20securities%20on%20NDS-OM%20platform.pdf) - FPIs were allowed indirect access to NDS-OM and NDS-OM Web module. Until this, they were only allowed to trade in OTC market (T+2) 4. **Direct Access to NDS-OM** *(Retail allowed)* 1. Retail Direct Gilt (RDG) Accounts - With the introduction of [Retail Direct](https://rbiretaildirect.org.in/#/) Portal, retail investors can now trade in primary and secondary market, along with stock exchanges, on the NDS-OM Retail platform. 2. FAQs on [RBI Retail Direct Scheme](https://rbiretaildirect.org.in/#/FaqRbiRetailDirect) 15. **Timeline** 1. [May 25, 2007](RBI_Circular_20070525_CSGL%20Option%20on%20NDS%20–%20Order%20Matching.pdf) - Indirect access extended to deposit taking NBFCs, Provident Funds, Pension Funds, Mutual Funds, Insurance Companies, Cooperative banks, the Regional Rural Banks and the Trusts maintaining gilt accounts with the NDS members 2. [Nov 27, 2007](RBI_Circular_20071127_%20CSGL%20Option%20on%20NDS%20–%20Order%20Matching.pdf) - Indirect access extended to Systemically Important Non-Deposit taking NBFCs ([NBFC-ND-SI](NBFCs.md)). 3. [May 27, 2008](RBI_Notification_20080527_NDS%20–%20Order%20Matching%20(OM)%20System%20–%20Access%20through%20the%20CSGL%20Route.pdf) - Indirect access of the NDS-OM was extended to other segments of investors, such as, other non-deposit taking NBFCs, Corporates and Foreign Institutional Investors (FIIs). 4. [Nov 18, 2011](RBI_Notification_20111118_Direct%20Access%20to%20Negotiated%20Dealing%20System-Order%20Matching%20(NDS-OM).pdf) - Direct access to NDS-OM to licensed Urban Co-operative Banks (UCBs) and Systemically Important Non-Deposit taking Non-Banking Financial Companies (NBFC-ND-SIs) 5. [Oct 18, 2024](RBI_Directions_20241018_Reserve%20Bank%20of%20India%20(Access%20Criteria%20for%20NDS-OM)%20Directions,%202024.pdf) - Direct access to NDS-OM was extended to a broader set of regulated entities. 16. October 5, 2020 - Request for Quote (RFQ) module was introduced on NDS-OM, to allow members to seek quotes for illiquid securities, thereby enabling market-making for such instruments. 17. **Settlement** 1. On NDS-OM, the clearing and settlement of these transactions are done by Clearing Corporation of India Limited (CCIL). It acts as counterparty for all trades in government securities (G-Secs). The net funds settlement is done through the participating members’ current account maintained with RBI and securities are settled in SGL/CSGL accounts of members maintained with RBI. 2. The settlement is done on a DvP - III basis though CCIL, which acts as the CCP. This eliminates counterparty risks and, through multilateral netting, reduces liquidity requirements. 3. The outright trades in G-Secs are generally settled between 4:30 PM and 5:30 PM on T+1 day basis. 18. NDS-OM have substantial advantages like anonymity, better access, quicker trade execution, improved pre and post trade transparency, reduction in trading costs, more efficient price discovery, straight through processing and improved market liquidity. 19. OMOs are done are usually through auction route (e-KUBER software) or on NDS-OM. Bulk amounts are done through notified OMOs but [creeping OMOs](https://rbi.org.in/scripts/BS_SpeechesView.aspx?Id=1305#:~:text=Issue%20regarding%20notified%20OMO%20and%20doing%20OMO%20through%20NDS%2DOM) happen on NDS-OM (for smaller amounts). Overall, the choice is based on assessment of liquidity situation. ### OTC (Outside NDS-OM/Reported Deals) 1. These are bilateral trades in Voice Market and hence conducted outside NDS-OM system 2. April 2013 - All Over-the-counter _(OTC)_ outright deals in _government securities_ are being _reported_ on the NDS-OM platform. 3. Both institutions, and individuals (having either GILT and demat accounts) can conclude a trade in the bilateral voice market. 4. The settlement is T+2 basis, unlike NDS-OM where it is T+1 basis. 5. [Oct 20, 2016](RBI_Notification_20161020_Participation%20of%20Foreign%20Portfolio%20Investors%20(FPIs)%20in%20Government%20securities%20on%20NDS-OM%20platform.pdf) - FPIs were allowed indirect access to NDS-OM and NDS-OM Web module. Until this, they were only allowed to trade in OTC market (T+2). ## Stock Exchanges 1. This is covered below. ## Retail Participation 1. Here we discuss which options from the above are available for retail investors ### OTC 1. **NDS-OM** *(electronic trading)* 1. Indirect Access (orders placed by Direct Members) to NDS-OM 2. Indirect Access (orders placed directly on NDS-OM Web) 3. Direct Access to NDS-OM (Retail Direct Platform) 2. **OTC (Outside NDS-OM)** 1. These are bilateral trades in Voice Market ### Stock Exchanges This covers the secondary market trading in government securities on stock exchanges 1. [Link](https://www.rbi.org.in/commonperson/English/Scripts/FAQs.aspx?Id=711#:~:text=on%20specific%20request.-,iv.%20Stock%20Exchanges,-8.6%20As%20advised) 2. **Wholesale Debt Market** 1. June 30, 1994 - The trading began on NSE in the Wholesale debt segment provides trading facilities for Central Government dated securities, State Government securities, Treasury bills (91 days and 364 days), etc. Here retail investors were almost absent. 1. Wholesale Debt Market (WDM) segment of NSE (now merged under the New Debt market as the Negotiated Trade Reporting Platform). 3. **Retail Segment** 1. [Jan 16, 2003]((https://rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=8001) - RBI announced the launch of a facility to buy and sell government securities at the stock exchanges (NSE, BSE and OTCEI) through an automated systems (a nation-wide, anonymous, order-driven, screen-based system) was launched. 1. With this, [NSE's Retail Debt Market (RDM)](https://ncfe.org.in/wp-content/uploads/2023/12/Handbook-on-Retail-Debt-Market-English.pdf) segment was also launched. 2. Before this, government securities were available for trading only in the WDM segment of the exchange. So Retail investors could only purchase it from banks. 3. Capital Market Segment: 1. [December 4, 2018](https://archives.nseindia.com/content/circulars/CMTR39581.pdf) - NSE (and BSE) started to offer web-based trading in [Government Securities (G-SEC) in Capital Market Segment](https://www.nseindia.com/market-data/bonds-traded-in-capital-market). 2. [July 28, 2020](https://www.nseindia.com/static/nse-introduces-trading-of-t-bills-and-sdls-in-capital-market-segment) - T-bills (treasury bills) and SDLs (state development loans) in were added to the capital market segment by NSE. 5. **Market Watch** 1. [NSE-CM](https://www.nseindia.com/market-data/bonds-traded-in-capital-market) 2. BSE - [Retail Debt Segment in government securities](https://www.bseindia.com/markets/debt/debt_retail.aspx) ## Data Releases 1. Financial Market Watch (RBI's Homepage) - [Link](https://rbi.org.in/scripts/financialmarketswatch.aspx) 1. ==Data on Outright Trades in G-Sec Market== 2. Average Daily Turnover in Select Financial Markets in the Monthly RBI Bulletin 3. Data/Publications by CCIL ## Master Directions/Guidelines 1. [Government Securities Act, 2006](https://www.rbi.org.in/commonman/english/Scripts/FAQs.aspx?Id=380) 1. [Government Securities Regulations](https://www.rbi.org.in/commonman/english/Scripts/FAQs.aspx?Id=380), 2007 was framed to carry out the purposes of the G S Act. 2. Reserve Bank of India (Access Criteria for NDS-OM) [Directions, 2025](https://rbi.org.in/scripts/NotificationUser.aspx?Id=12777), Feb 7, 2025 1. Reserve Bank of India (Access Criteria for NDS-OM) Directions, 2024, dated [Oct 18, 2024](RBI_Directions_20241018_Reserve%20Bank%20of%20India%20(Access%20Criteria%20for%20NDS-OM)%20Directions,%202024.pdf) *(withdrawn)* 3. Master Directions on Access Criteria for Payment Systems, dated [January 17, 2017](https://www.rbi.org.in/Scripts/BS_ViewMasDirections.aspx?id=10833) 1. Access criteria for payment systems, dated [September 21, 2011](RBI_Notification_20110921_Access%20criteria%20for%20payment%20systems.pdf) *(withdrawn)* 2. Access Criteria for National Payment Systems, dated [September 22, 2008](RBI_Notification_20080922_Access%20Criteria%20for%20National%20Payment%20Systems.pdf) *(withdrawn)* 4. Reserve Bank of India (Electronic Trading Platforms) Directions, 2025, dated [June 16, 2025](https://rbi.org.in/scripts/NotificationUser.aspx?Mode=0&Id=12870) 1. [Electronic Trading Platforms (Reserve Bank) Directions, 2018 dated October 05, 2018](https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=11385&Mode=0) *(withdrawn)* 5. [Subsidiary General Ledger Account: Eligibility Criteria and Operational Guidelines](RBI_20210922_Subsidiary%20General%20Ledger%20Account-%20Eligibility%20Criteria%20and%20Operational%20Guidelines.pdf) dated Sept 22, 2021. ## FAQs 1. [NDS-OM](https://rbi.org.in/scripts/FAQDisplay.aspx?Id=86) Module 2. [NDS-OM](https://rbiretaildirect.org.in/#/FaqNdsOmSecondaryMarket) ## Related 1. [[G-Secs-Primary Market]] 2. [[G-Secs-Secondary Market]] 1. Open Market Operations (OMOs) by RBI 1. [[Open Market Operations (OMOs)|Outright transactions in G-secs]] 2. Reversible Transactions 1. [[Liquidity Adjustment Facility (LAF)|Liquidity Adjustment Facility-LAF]] (Between RBI and market participants) 2. Trading in G-Secs (between market participants) 1. [[Outright Transactions in G-Secs in Secondary Market|Outright Transactions]] 2. Reversible Transactions 1. [[Repos and Tri-Party Repo#^9de7da|Tri-party Repos in G-Secs]] 2. [[Repos and Tri-Party Repo#^a11ed6|Market Repos in G-Secs]] 3. [[Open Market Operations (OMOs)]] 3. [[STRIPS]] 4. [[Reserve Money]] 5. [[Money Market Operations (MMO)]] 6. [[State Development Loans]] 7. [[Fiscal-Monetary Policy Interface in India - OPEN]] 8. [[Fiscal-Monetary Co-ordination in India - An Assessment 2013 OPEN]] 9. [[Fiscal Policy and Economic Reforms OPEN]] 10. [[Financial Stability-Issues and Challenges - By Duvvuri Subbarao, 2009]] ## References 1. RBI. NDS-OM Web. [Link](https://www.rbi.org.in/commonman/english/scripts/Content.aspx?Id=988) 2. RBI. (2020). Government Securities Market A Primer. Publications/Occasional. [Link](https://www.rbi.org.in/scripts/PublicationsView.aspx?id=16413) 3. RBI. Nov 12, 2021. Launch of RBI-Retail Direct Scheme and Reserve Bank- Integrated Ombudsman Scheme by the Hon’ble Prime Minister on November 12, 2021 - Welcome Address by Shri Shaktikanta Das, Governor, Reserve Bank of India. \[Speeches\]. [pdf](RBI_Speeches_20211112_Launch%20of%20RBI-Retail%20Direct%20Scheme%20and%20Reserve%20Bank-%20Integrated%20Ombudsman%20Scheme%20by%20the%20Hon’ble%20Prime%20Minister%20on%20November%2012,%202021%20-%20Welcome%20Address%20by%20Shri%20Shaktikanta%20Das,%20Governor,%20Reserve%20Bank%20of%20India.pdf) 4. RBI. (Aug, 2008). "Access to NDS-Order Matching Platform" in RBI's Annual Report-2008. [Link](RBI_Annual Report_2008, page 233](RBI_Annual%20Report_2008.pdf#page=233&selection=6,0,6,27) 5. Fleming, M., Sareen, S., & Saggar, S. (2016). _Trading activity in the Indian government bond market_ (Staff Report No. 785). CAFRAL. [Link](https://www.newyorkfed.org/medialibrary/media/research/staff_reports/sr785.pdf) | [pdf](CAFRAL_201606_Trading%20activity%20in%20the%20Indian%20government%20bond%20market.pdf) 6. Vardhana Pawaskar and Payal Ghose (CCIL). (January 2025). Retail Participation in Government Securities Market - A Potential Game Changer for Vision Viksit Bharat. Working Paper Serial No. ER/015. Research Department, CCIL. [Link](https://www.ccilindia.com/documents/d/ccil/Retail%20Participation%20in%20Government%20Securities%20Market%20WP-pdf) [^1]: RBI. (Aug, 2008). "Access to NDS-Order Matching Platform" in RBI's Annual Report-2008. [Link](RBI_Annual Report_2008, page 233](RBI_Annual%20Report_2008.pdf#page=233&selection=6,0,6,27)