New Delhi, Nov 24: In an effort to develop the secondary debt market, the National Stock Exchange (NSE) has decided to offer trading facility for high networth and non-institutional investors in its debt market segment from early next year, a top official of the exchange said.``The exchange is working out the various modalities like a clearing corporation for the debt market and the trading pattern for various debt securities in order to facilitate non-institutional investors to trade in debt market,'' NSE deputy managing director Ravi Narain said.
He said the exchange was hopeful of offering trading facilities from early next year. Currently banks and primary dealers are the only players trading on NSE whole-sale debt market segment.
NSE debt market segment could not take off due to various legal provisions like the issue of stamp duty which makes trading in debt market unattractive.Narain said in the current year, there has been an increase in trading volume on the exchanges debt segment and with the introduction of trading for non-institutional investors, the business would further increase.
The average daily turnover on the exchange has more than doubled since the beginning of the year. From an average daily turnover of Rs 335 crore in January 1999, turnover increased to Rs 1,000 crore by August, he added.Under the new trading pattern, large number of trusts and high networth investors are expected to start trading on the exchange, Narain said.These high networth investors, he said, could not buy/sell debt securities on the exchange as the average size of the trade was very high ranging between Rs 6-7 crore.
``It is not possible for investors who invest a few lakh rupees to buy/sell debt instruments on the exchange,'' he said adding that various provident funds and trusts which invest small amounts ranging between Rs 10-15 lakh every month could also not trade on the market.
However, he said, the exchange does not have plans to offer the facility for small investors due to high face value of the debt instruments.
The average minimum face value of government securities is Rs 1 lakh. ``Until the issuers start offering securities in lower face value, it is not possible for NSE to offer the facility to retail investors,'' Narain added.At present, government securities are mainly traded on NSE with its share being 92.89 per cent, followed by treasury bills, public sector and corporate bonds accounting for the rest.
Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.