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Informist, Friday, Oct. 18, 2024

 

--RBI: Extended direct access to NDS-OM to broader set of regulated entities

 

NEW DELHI – The Reserve Bank of India Friday notified a new set of access criteria for the Negotiated Dealing System – Order Matching platform, expanding it to a broader set of regulated entities. Pension funds, regulated market infrastructure institutions, and a wider subset of non-banking financial companies can now seek direct access to the platform.

 

"Direct access to NDS-OM has been extended to a broader set of regulated entities and the process for seeking direct access to NDS-OM... has been streamlined," the notification said. Two prior circulars on accessing the platform were withdrawn, the RBI said.

 

The revised access criteria norms issued Friday would come into effect immediately, and entities with direct access to NDS-OM under the earlier norms would be granted access under the new directions as well, the notification said. The NDS-OM platform is an electronic mode of trading government securities developed by the RBI and hosted by Clearing Corp. of India Ltd.

 

Now, any entity eligible to invest in government securities is eligible to access the NDS-OM platform through either direct or indirect access, the RBI said. Entities eligible for direct access will include banks, standalone primary dealers, non-banking financial companies including housing financiers, all India financial institutions, mutual funds, provident funds, pension funds, insurance companies, regulated market infrastructure entities and any others the RBI specifically permits.

 

Prior norms had more stringent rules for non-banking financial companies, including a set of financial parameters and being designated systemically important by the RBI. Pension funds, which are now also allowed direct access to NDS-OM, have seen their government bond holdings rise steadily. According to latest available RBI data, pension funds held 4.74% of outstanding gilts as of June-end, against 3.50% when their holdings were first tracked in the quarter ending March 2022.

 

Market infrastructure institutions include stock exchanges, clearing houses and depositories such as the National Stock Exchange of India Ltd. and the National Securities Depository Ltd. These institutions are allowed direct access to invest their settlement guarantee fund in government securities, subject to the RBI's prescribed terms, the guidelines said.

 

Entities seeking direct access to NDS-OM must have a subsidiary general ledger account with the central bank, a current account with the RBI or a designated settlement bank and membership of securities segment of Clearing Corp. of India, the guidelines said. The RBI can conditionally grant access, and revoke it later if its conditions aren't met or the minimum norms are not fulfilled.

 

Any institution not granted direct access can indirectly access NDS-OM through an entity with direct access, which will assume responsibility of settling transactions. Those who do not fulfil the eligibility criteria or other requirements may also seek indirect access to the government bond trading platform, the new norms said.

 

"Any entity that is permitted to maintain both a SGL (subsidiary general ledger) and a constituent account...may at its discretion, choose to avail indirect access to NDS-OM, instead of direct access," the RBI said.  End

 

Reported by Aaryan Khanna

Edited by Ashish Shirke

 

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