India’s Central Bank Proposed Online Trading Platform

Technology has resulted in many changes in the worldwide financial markets. The rise of second and third tier economies as aggressive competitors on the world’s stage is perhaps most striking. Nowhere is this more apparent than the rise of financial markets in India. This once traditional nation is building a financial infrastructure that will likely soon rival the top economies. One example of this growth is the Reserve Bank of India’s (RBI) soon to launch online trading platform. According to the latest news release from RBI, the central bank will soon appoint Clearing Corp of India Ltd (CCIL) to build an online trading platform for government bonds. This online trading platform will allow traders to monitor yields in real time and execute transactions directly on the platform.

Fortunately, for the Indian online retail traders, this trading platform will likely offer a lower minimum lot size from the present 10,000 and higher reservations allowing much wider access to the government bond market. This trading platform will be similar to equity trading platforms already widely used in India by their approximately 40 million retail equity traders. Retail traders currently have to trade bonds through a bank or broker that places their trades through proprietary accounts. This trading method is very cumbersome and prevents clients from profiting from short term volatility in the Indian bond market. RBI believes that developing this trading platform is a must to attract retail investors to the bond market. The increased size of government debt auctions requires retail participation according to an anonymous trader. Smart investors will keep a close eye on these developments.

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