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.

AUCTION OF GOVERNMENT SECURITIES: NON-COMPETITIVE BIDDING FACILITY TO RETAIL INVESTORS

WHAT WAS THE NOTIFICATION?

 As part of the overall strategy of diversifying the investor base for government securities, the Government of India and RBI have been taking various measures to encourage participation of

retail investors in G-Sec market including introduction of non-competitive bidding in primary auctions.

 In continuation of this endeavour, the Union Budget 2016-17 had announced, inter-alia, that RBI will facilitate retail participation in the primary markets through stock exchanges. In line with this announcement and in consultation with SEBI, it has been decided that in addition to scheduled banks and primary dealers;

1. Specified stock exchanges will be permitted to act as aggregators/facilitators.

2. These stock exchanges will submit a single consolidated non-competitive bid in the auction process and will put in place necessary processes to transfer the securities so allotted in the

primary auction to their members/clients.

3. Stock-exchanges, desirous of acting as aggregators/facilitators, may approach CGM, IDMD, RBI, with a copy of the No Objection Certificate (NOC) from SEBI, for necessary approvals.