WHEN-ISSUED GILT NORMS EASED

According to the Reserve Bank of India (RBI) only Primary Dealers (PDs) can take a short position in the ‘when issued’ (WI) market. Non-Primary Dealer entities can sell the WI security to any counter party only if they have a preceding purchase contract for equivalent or higher amount. ‘When, as and if issued’ security refers to a security that has been authorized for issuance but not yet actually issued. All WI transactions are on and ‘if’ basis, to be settled if and when the actual security is issued.

• As part of the new guidelines for the WI market, the RBI has dispensed with the requirement that any WI transaction in gilts must have a primary dealer as a counter party.
• Only PDs can take a short position in the WI market. Non-PD entities can sell the WI securities to any counter party only if they have a preceding purchase contract for equivalent or higher amount.