The Clearing Corporation of India (CCIL) has been entrusted the task of developing a platform for e-auctions of government bonds. The Reserve Bank of India (RBI) has mandated the task to CCIL, on which government securities would be auctioned.
The move is expected to reduce the burden of RBI, which is time consuming and involves tedious paperwork, officials familiar with the programme said. Explaining the function of the new platform, RH Patil, chairman, CCIL told FE that once the platform is functional, bids for government securities could be made electronically. “You bid in the morning and get an allotment by afternoon. The same instrument will be immediately traded in the secondary market.”
Currently, the papers are traded only after allotment and payments are made, which usually takes a couple of days. Patil said the new platform would be advantageous, as it will help the bidder in getting benefits of trading if market conditions are favourable. As to the time taken for CCIL to get systems in place, Patil did not specify a time frame. “It will take a couple of months for the platform to be fully functional, as it is a complex platform”, he said. The new platform will have different features. “The papers will display both rates; price-based and yield-based”, he said.
He said that the new platform would further strengthen the government securities market. The auction bids can take place electronically. This will bring more transparency in the functioning of the debt market in the same way as formation of the National Stock Exchange (NSE) has contributed to the equity market.