Ref No. FMRD.DIRD.3/14.03.07/2016-17
All eligible market participants
Participation by Demat Account Holders in the Government Securities
Market: Access to NDS-OM Platform
As announced in the First Bi-monthly Monetary Policy Statement, 2015-16,
an Implementation Group with representation from all the stakeholders was
constituted to recommend specific measures to enable seamless movement of
securities from Subsidiary General Ledger (SGL) form to demat form and vice
versa and to provide demat account holders a functionality to put through
trades on Negotiated Dealing System – Order Matching (NDS-OM).
2. Taking into account the
recommendations of the Group, the Clearing Corporation of India Ltd. (CCIL)
was advised to put in place necessary arrangements in coordination with the
depositories viz. National Securities Depository Limited (NSDL) and Central
Depository Services (India) Limited (CDSL) to enable demat account holders
to trade on NDS-OM.
3. Accordingly, it has been
decided to allow Demat Account Holders of NSDL and CDSL to put through
trades in Government Securities on the NDS-OM platform through their
respective Depository Participant (DP) bank which is an SGL Account Holder
and a direct member of NDS-OM and CCIL.
4. Details of the scheme for
accessing NDS-OM for execution of trades by demat account holders are given
in the Annex. Further operational details
of the Scheme will be issued by CCIL separately. The guidelines shall be
effective from August 16,
Chief General Manager
to Individual Retail Investors holding Demat Accounts to Secondary Market
in Government Securities via Reserve Bank of India’s NDS-OM System
The secondary market in
Government Securities (G-Sec) predominantly comprises of Banks, Primary
Dealers, Insurance Companies, Mutual Funds, Financial Institutions and
other institutional investors. Most of these entities, maintain their
holdings in Government Securities in their Subsidiary General Accounts
(SGL) with the Public Debt Office of Reserve Bank of India. A few of the
newer participants maintain Gilt Accounts with designated market players
authorized to open and maintain Constituent SGL Accounts with RBI.
Secondary market trades in G-Sec
is largely carried out on the Negotiated Dealing System – Order Matching
(NDS-OM) owned by RBI , which is hosted, maintained and operated by the
Clearing Corporation of India Limited (CCIL) on behalf of RBI. NDS-OM,
which primarily provides direct access to SGL Account holders, also
supports access to Gilt Account Holders through its Web Based Extension
i.e., NDS-OM-Web based on requests by the concerned Primary Member. Both
NDS-OM and NDS-OM-Web facilitate anonymous dealing on the Order Matching
Segment as also reporting of bilateral trades concluded outside the system.
It has been decided to
facilitate access to NDS-OM by the retail segment comprising of individual
investors having demat accounts with the depositories viz. National
Securities Depository Limited (NSDL) and/or Central Depository Services
(India) Limited (CDSL), desirous of participating in the G-Sec market, by
using their demat accounts for their transactions and holdings in G-Sec.
Any individual investor who
maintains a demat account with either of the depositories would be eligible
to avail of these services. Initially, this access would be facilitated
through any of the existing NDS-OM Primary Members, who also act as
Depository Participants for NSDL and/or CSDL.
The Scheme seeks to facilitate
efficient access to the retail individual investor to the same G-Sec market
being used by the large institutional investor in a seamless manner.
3. Dealing / Access to NDS-OM
Individuals holding demat
accounts would have the following options to trade:
(i) NDS-OM Web: Primary
members of NDS-OM who are also Depository Participants can grant demat
account holders access to the NDS-OM Web Module for placing buy / sell
orders directly on NDS-OM.
(ii) NDS-OM Main: Individuals
holding demat accounts can instruct their Depository Participants, who are
also primary members of NDS-OM, to place orders on their behalf on the
NDS-OM trading platform, similar to the facility available to Gilt Account
(iii) Bilateral trades in Voice Market: Demat account holders can also conclude a trade in
the bilateral voice market. The responsibility of reporting such trades on
the Reported Deal Segment of NDS-OM will rest with the Primary member
4. Settlement & Risk
(i) Trades concluded and/or
reported in respect of a retail individual investor holding Demat Account
under this Scheme, shall flow to CCIL for settlement, which would act as
the Central Counterparty for all such trades and undertake clearing and
settlement of these trades as per its Bye Laws, Rules & Regulations.
(ii) Primary members shall
ensure that demat account holders do not place sell order without
sufficient balance of securities in the demat account.
(iii) Trades executed by demat
account holders under this Scheme shall be subject to the code of conduct
prescribed for NDS-OM from time to time.