RBI tightens rules for trading in government securities

The Reserve Bank of India has turned strict about government securities trade rules. It has told market participants to use the “price / yield range setting” facility provided on the e-Kuber platform before placing bids in order to eliminate instances of fat-finger / big-figure error by the bidders. 

The central bank also said that no request for cancellation of bids will be entertained after the close of the auction window. 

\”There have been a few instances of fat-finger / big-figure error by the bidders in the g-sec auctions it suggests that some of the market participants are yet to put in place the “price / yield range setting” facility in their system,\” RBI said Wednesday. 

It has been advising the participants to use the “price / yield range setting” facility as a risk management measure. The facility allows a market participant to define a range i.e., a maximum and a minimum value for bids they intend to submit in an auction. The range can be set in either price or yield terms, for each security in every auction, which can be set before the auction and can also be modified during the auction. Once the limits are set by the participating entity, the bids in the auction are automatically validated against the set limits. 

\”This is expected to eliminate instances of fat-finger / big-figure error by the bidders in the g-sec auctions,\” RBI said.