HELD FOR TRADING (HFT) PORTFOLIOS

 Held for Trading investment are financial assets that are held with the sole intent of generating short term profits. HFT investments are reported at its fair value on the balance sheet and any change in any the value of investment or dividend and interest income received during the period of holding will be reported in the profit and loss statement.

 The securities under HFT category have to be sold within 90 days of investment. If the bank is not able to sell the security within 90 days due to exceptional circumstances such as tight liquidity conditions or extreme volatility or market becoming unidirectional, the security should be shifted to the Available for Sale category.

WHAT IS SECONDARY MARKET?

 The secondary market, also called the aftermarket and follow on public offering is the financial market in which previously issued financial instruments such as stock, bonds, options, and futures are bought and sold.

 The term "secondary market" is also used to refer to the market for any used goods or assets, or an alternative use for an existing product or asset where the customer base is the second market (for example, corn has been traditionally used primarily for food production and feedstock, but a "second" or "third" market has developed for use in ethanol production).

 With primary issuances of securities or financial instruments, or the primary market, investors purchase these securities directly from issuers such as corporations issuing shares in an IPO or

private placement, or directly from the federal government in the case of treasuries. After the initial issuance, investors can purchase from other investors in the secondary market.

OVER-THE-COUNTER GOVERNMENT SECURITIES TRANSACTION BY FOREIGN PORTFOLIO INVESTORS (FPIS) – SETTLEMENT PERIOD 

WHAT WAS THE NOTIFICATION?

 Earlier, Foreign Portfolio Investors (FPIs) are required to settle transactions in Government Securities in the Over-the-Counter-(OTC) market on a T+2 basis.

 It has now been decided to permit FPIs to settle OTC secondary market transactions in Government Securities either on T+1 or on T+2 basis. It may be ensured that all trades are reported on the trade date itself.

WHAT IS T+1 AND T+2?

 Whenever you buy or sell a stock, bond, or mutual fund, there are two important dates of which you should always be aware: the transaction date and the settlement date.

 The abbreviations T+1, T+2, and T+3 refer to the settlement dates of security transactions which occur on a transaction date plus one day, plus two days, and plus three days, respectively. 'T' is the transaction date.