GOVT MANDATES RETIREMENT FUNDS TO TRADE ON BOURSES

The government has asked all retirement funds to compulsorily trade in debt instruments on the exchanges. The diktat aims at shifting some of the biggest bond buyers from an opaque market where deals are cut over the telephone to a more transparent one. Such one to-one transactions often hamper liquidity, transparency and price discovery in the secondary bond market. The Government has now set a deadline of Feb 28 for pension funds to report all bond purchases on BSE, NSE or with FIMMDA. All bond transactions would also have to go through the two authorized clearing corporations - NSCCL or ICCL.