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Negotiated Dealing System or NDS Explained
July 31, 2017
As the majority of trading systems have ventured into the realm of Internet, the government decided to follow suit with its government securities i.e. G-Secs.
In 2002, the government launched Negotiated Dealing System (NDS), an online platform for selling government securities in the primary market. Qualified bidders can place their bids on NDS and invest conveniently.
The NDS platform is used for the trading of all kinds of government securities such as treasury bills and bonds, etc. Even the State Development Loans are auctioned on this platform.
Significance of the Negotiated Dealing System
The Negotiated Dealing System allows the participants viz. Commercial Banks, primary dealers, etc. to bid for the government securities via an electronic platform when the Reserve Bank of Indian organizes auctions. These auctions take place in the primary market, albeit using the same platform.
The NDS platform also handles the settlements of the G-Secs transactions in the secondary market. It offers an interface to the RBI and Public Debt Office for the same. These secondary market transactions usually take place over the counter (OTC).
Note: Access to NDS is restricted to only those individuals who have an SGL account or a current account with the RBI.
NDS is an important tool for the government as it allows a seamless sale of G-secs under a high level of regulation and organization. The bidders can also invest in the securities conveniently online and under anonymity too.
