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Business News/ Market / Stock-market-news/  BSE to launch trading in govt bonds in demat form
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BSE to launch trading in govt bonds in demat form

The stock exchange also aims to increase the speed of trades on its platform to 20 microseconds in the next three years, 10 times faster than the current speed

BSE’s current trading speed is at the level of 200 microseconds and BSE is trying to take that to 20 microseconds. Photo: Hemant Mishra/MintPremium
BSE’s current trading speed is at the level of 200 microseconds and BSE is trying to take that to 20 microseconds. Photo: Hemant Mishra/Mint

Mumbai: To make it easier for individual investors to invest in government bonds, stock exchange BSE will soon start offering trading in such securities in dematerialized mode.

“We are in the process of launching government bonds on depository dematerialized (demat) mode," BSE managing director and CEO Ashish Kumar Chauhan told PTI. “Today it is very difficult for an individual to invest in government bonds. But once it comes easily in demat, then an individual investor can also invest in government bonds," Chauhan added.

Last month, BSE had introduced an “overnight liquid fund" product on its mutual fund platform, BSE STAR MF. The risk-free product enables smallest investors, corporate or a trust to invest even for a period of a single night, in liquid funds anywhere in India.

“Stocks and derivatives are basically risky instruments. Today, we (BSE) are thinking of risk-free instruments," Chauhan said on the sidelines of the Skoch Summit. Talking about the liquid fund, Chauhan said the product is seeing daily transactions worth 400-500 crore and is expected to generate a big response from the households in the near-term. To increase participation of the retail and mid-segment investors in the government securities market, RBI had earlier extended web-based access to secondary market trading platform and primary market platform for the gilt account holders.

The banking sector regulator has also proposed to introduce a similar web-based solution for participation of all mid-segment/retail investors having gilt accounts. The facility is expected to be made available in a few months. Considering the need to tap private savings through G-secs, RBI had also said that retail investors could be provided direct access to both primary and secondary market platforms without any intermediary.

Meanwhile, BSE said it aims to increase the speed of trades on its platform to 20 microseconds in the next three years, which would be ten times faster than the current speed. BSE’s high-speed Bolt Plus system is already the fastest trading platform in the country with a response time of about 200 microseconds to the trades executed on it.

“We are currently at the level of 200 microseconds and we are trying to take that to 20 microseconds. This we plan to achieve over the next three years," Chauhan told PTI.

He also allayed concerns that high-speed technology can go against the interest of the markets or adversely impact the share prices.

Capital markets regulator Securities and Exchange Board of India (Sebi) is apparently working on a new set of norms for algorithmic trading, which refers to orders on bourses that are generated using high-frequency and automated execution logic. “There is no human intervention in algo trading, because of which there are concerns among regulators and investors about the possible risks arising out of it. We need to understand it and use the algo trading for the benefit of investors and the market, and reduce such risks," Chauhan said.

“People feel that the sudden fall in share prices is due to algo trading...Such rumours come about...But, as regulations are made, investors would develop confidence. “It takes time to make regulatory framework for a new technology and Sebi is trying to come out with a good set of norms," he added.

BSE upgraded its technology platform in November 2013 to BOLT Plus, which is based on the global giant Deutsche Boerse’s trading architecture. Over 900 brokers with more than 1,00,000 branches and millions of retail investors are on the Bolt Plus system.

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Published: 11 Jun 2015, 04:45 PM IST
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