BSE's Bond with Investors

The Stock Exchange, Mumbai (BSE), the premier stock exchange in the country has heralded the capital market revolution in India and has contributed immensely towards the achievement of global standards of efficiency and safety by the Indian Capitals Markets. The nationwide BSE BOLT Network today, spread across more than 400 cities in the country, represents one of the most formidable and efficient distribution channels for financial securities in the Indian Financial Markets. BSE has always been in the forefront in introducing new and innovative financial products and services suited to the Indian Business Environment during its 127 years of fruitful association with the Indian Investor Community.

SE, with it's 127 years of association with the Indian investors, has been in the forefront to provide the highest standards of service to the Indian investor Community. The BSE Debt Segment, while reiterating this commitment, promises to provide an integrated trading, clearing and settlement platform for the Fixed Income Markets with information products and services suited to meet all the trading and investment requirements of the market participants.

The Reserve Bank of India, vide the following circulars

DBOD. FSC. BC. No. 39 /24.76.002/2000 dated October 25, 2000, IDMC. PDRS. PDS. No PDS-2 /03.64.00/2000-01 dated November 13, 2000, DBS. FID No. C 10 / 01.08.00 / 2000-0122 dated November, 2000 permitted the Banks, Primary Dealers and the Financial Institutions in India to undertake transactions in debt instruments among themselves or with non-bank clients through the members of The Stock Exchange, Mumbai (BSE). This notification paved the way for the Exchange to commence trading in Government Securities and other fixed income instruments. The Wholesale Debt Segment of the Exchange commenced its' operations on June 15, 2001.

The membership of the Debt Segment is being granted only to the Existing Members of the Exchange. The members need to have a minimum net worth of Rs.1.5 crores for admission to undertaking dealings on the Debt Segment. There is no security deposit applicable for the membership of the Debt Segment. The annual approval/renewal charges at present is Rs.25,000/-.

The BSE Debt Segment offers the market participants in the Wholesale Debt Market an efficient and transparent trading mechanism through it's GILT System. The GILT system is envisaged to become the single point trading platform for all types of Debt securities and instruments. The GILT system will over a period of time provide trading facilities for Central and State Govt. securities, T-Bills, Institutional bonds, PSU bonds, Commercial Paper, Certificates of Deposit, Corporate debt instruments and the new innovative instruments like municipal securities, securitized debt, mortgage loans and STRIPs.

GILT facilitates faster and efficient price dissemination through the Touchline of the Trading System. All relevant information which are of crucial importance in the trading process like the Accrued Interest and Delivery Value are readily available in the system A Yield Calculator is made available both separately and as part of the various order Entry and trade reporting screens.

The major participants in the Wholesale Debt Market like the Banks, Primary Dealers and Institutions are enabled to execute trades through the Members of the WDS of the Exchange through the participant code (Client Code) allocated to each of them, which is one of the key parameters to be entered by the Member in the GILT system while executing the transaction. Trading on the GILT system is currently permitted from 10.00 a.m. to 5.30 p.m. from Monday to Friday and 10.00 a.m. to 1.30 p.m. on Saturday.

The Settlement for the securities traded in the GILT System is on a Trade by Trade DVP basis. The primary responsibility of settling trades concluded in the wholesale segment rests directly with the participants who would settle the trades executed in the GILT system on their behalf through the Subsidiary Ledger Account of the RBI or the CCIL A/c through the NDS. Each transaction is settled individually and netting of transactions is not allowed. The Exchange monitors the Clearing and Settlement process for all the trades executed or reported through the 'GILT' system. The Members need to report the settlement details to the Exchange for all the trades undertaken by them on the GILT system. The settlements for all the trades executed on the GILT system are on a rolling basis. The Exchange permits settlement periods ranging from the same day (T+0) to a maximum of 6 working days (T+5).

The BSE Debt Segment has shown a gradual but consistent growth in turnover in the past few months with increased participation from the mainstream Banking and Institutional Players. The Wholesale Debt Segment today witnesses active participation today from more than 50 Major Banks and Institutions in the Debt Market with Average Daily Turnover of around Rs.50 Crores currently. The Segment expects a sustained rise in turnover and participation in the next few months with the initiation of activity by new Members and the continued support and participation of the major Banks, Primary Dealers and Institutions.