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Negotiated Dealing System (NDS)

What Is the Negotiated Dealing System (NDS)?

The Negotiated Dealing System, or NDS, is an digital buying and selling platform operated by the Reserve Bank of India (RBI) to facilitate the issuing and trade of presidency securities and different varieties of cash market devices. The objective was to cut back inefficiencies stemming from phone orders and handbook paperwork, whereas rising transparency for all market members.

Understanding Negotiated Dealing System

The Negotiated Dealing System was launched in February 2002 to assist the Reserve Financial institution of India, or RBI, to reinforce the dealings of fixed income investments. Whereas the RBI owns the NDS, it’s administered by the Clearing Company of India Ltd. (CCIL). Previous to the NDS, the nation’s authorities securities market was primarily telephone-based, which meant that consumers and sellers needed to place trades over the telephone, submit bodily Subsidiary Normal Ledger switch types, and subject checks for the settlement of funds to the Reserve Financial institution of India. These gradual and inefficient procedures led to the event and implementation of the NDS.

In August 2005, the RBI launched the Negotiated Dealing System – Order Matching system, or NDS-OM, an an digital, screen-based, nameless, order-driven buying and selling system for dealing in authorities securities. The system is designed to deliver transparency to secondary market transactions, whereas enabling members to position bids and presents instantly on the NDS-OM display screen.

How the NDS Works

There are two varieties of NDS-OM members, together with:

  • Direct Members – Direct members have present accounts with the RBI and might instantly settle trades on NDS-OM.
  • Oblique Members – Oblique members shouldn’t have present accounts with the RBI and should settle by NDS-OM members which have direct accounts. Most international institutional buyers have oblique entry, whereas resident entities could have direct entry.

Many different nations have related digital techniques in place for managing authorities securities, cash market accounts, and associated securities to extend transparency and decrease prices.

For extra details about the Negotiated Dealing System, see the RBI’s Negotiated Dealing System Overview.

Negotiated Dealing System Modules

The Negotiated Dealing System consists of two modules, that are designed for several types of member establishments.

These modules embrace:

  • Major Market Module: The RBI makes use of the first public sale platform for the public sale of federal and state securities, in addition to treasury payments. The platform permits members to electronically submit their bids in major auctions and obtain allotment experiences.
  • Secondary Market Module: Over-the-counter buying and selling typically occurs over the telephone, however everyone seems to be required to report these trades utilizing the NDS secondary market module. The information then flows to the Clearing Company of India Ltd. for clearing and settlement, which avoids the necessity for paper-based settlement processes.

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