Atmadip Ray & Sujoy Manna

Mumbai, April 11: RISKXPRESS.com, the first virtual interactive negotiating platform for fixed income market in the country, is looking towards tapping the illiquid debt segment of the government securities (GoI-Secs) market.

Said RiskXpress.com’s product development & marketing head, Sudhir Dash: “We are targeting the illiquid segment of the GoI-Secs market. As of now, only four to six securities are liquid and are transacted daily, out of the 200 government securities issued and outstanding, but the rest are illiquid and are rarely traded.”
Portfolio managers are of the view that the absence of counterparties in trading is the major hindrance to revive the illiquid segment of GoI-Secs.

The negotiating platform of RiskXpress.com, by bringing in a large number of participants, could revive the market. There is a possibility that some counterparties might have liability patterns that could match the illiquid assets.

RiskXpress.com has also provided a gamut of services including negotiation platforms for non-SLR bonds, corporate debentures, inter-corporate borrowing programme amongst others which would give the edge over the real-time gross settlement (RTGS) promoted by the Reserve Bank of India (RBI). RTGS would only provide connection and transaction facilities in the GoI-Secs market. RiskXpress.com is also providing platforms for interest-rate swaps and derivatives and secondary auctions. Negotiating platform for the secondary auctions is probably the first in the world — Merrill Lynch, Morgan Stanley and Goldman might come with such services in the third quarter of the calendar year.

Unlike in the developed capital markets, volumes of debt market trades in the country is much more lower compared to equities. Volumes have picked up over the years, but it is minuscule when compared to the equity market. Treasury heads feel that there is enormous growth potential for the debt segment.

The announcement of setting up clearing corporation would also act as a catalyst for growth. The advent of net-based trading in debt instruments will remove the drawbacks of the present fragmented market. Speaking on the drawbacks in the current offline trading, Mr Dash said that the fixed income market is currently fragmented with deals conducted over the telephone.

“We are providing dealing system where the counterparties can directly post their buying and selling interests”, he said.

The entire process of information dissemination in offline trading is suboptimal and biased. The online counterpart by providing a neutral platform helps information to disseminate in an efficient manner.

“The portal provides software applications for discovering deals and structure of the instrument as well as optimise price efficiency. In a negotiating online platform, deals happen in an anonymous environment, where deals can take place on an one-to-one, one-to-many and many-to-many framework”, Mr Dash added.

Since the site brings the entire gamut of fixed income player, this concurrent participation optimises the price discovery process. The tightly defined instruments ensure that the entire negotiation and deals happens in a transparent manner.

Anonymity and online credit limits setting module ensures that prices are not influenced by stature of the negotiator.

Another advantage is that the transaction and intermediation cost will also go down significantly.