RBI to unveil screen-based trading

"It is impossible unless the RBI upgrades its systems. It should link the public debt offices (PDO) with other departments that handle the subsidiary general ledger (SGL) and current accounts," a source said. Incidentally, the RBI has embarked on setting up a real-time gross settlement (RTGS) which is expected to upgrade settlements and trading in the money and thesecurities market. The RBI, on its part, intends to link its offices through V-Sat very soon and this will provide on-line linkages between the offices of the central bank, the ministry of finance, monitoring of government finances and also among other participants like banks, PDs and satellite dealers. The RBI has also directed money market players to develop a code of conduct which will be compatible with the electronic dealing systems and the subsequent technological upgradation.

The central bank has also set up a committee that is also looking at the introduction of separate trading of registered interest and principal of securities (STRIPS) in the government securities market. This working group is examining the pros and cons of implementing STRIPS and will be submitting its report in a month’s time. The RBI has decided "in principle" to create an environment that would facilitate introduction of interest rate swaps.

The introduction of rupee derivatives will go a long way in providing instrumentsfor investors to hedge their exposures. The RBI proposes to examine the issue by consulting market participants, relevant aspects such as standard documentation, benchmark rate, and then allow the product into the market.