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Government Securities Market Overview

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Questions and Answers

What is the primary type of market for trading government securities?

Exchange-traded market

Auction market

Derivatives market

Over-the-counter market (correct)

What technological system was introduced by the RBI to improve transparency in the government securities market?

Automated Trading System (ATS)

Central Clearing System (CCS)

Negotiated Dealing System (NDS) (correct)

Order Matching System (OMS)

Which statement about the Negotiated Dealing System (NDS) is accurate?

It primarily serves as a trading platform for government securities.

It enhances operational efficiency by automating transaction data flow. (correct)

It was introduced after the closing of the Bombay Stock Exchange.

It focuses solely on retail trading in government securities.

When did the RBI launch the NDS-OM platform?

<p>August 2005</p> Signup and view all the answers

What is the primary role of the NDS in the government securities market?

<p>To serve as a trade reporting platform</p> Signup and view all the answers

Study Notes

Government Securities Market Overview

The secondary market for government securities is mainly an over-the-counter (OTC) market.
Major exchanges like the National Stock Exchange (NSE), Bombay Stock Exchange (BSE), and Over the Counter Exchange of India (OTCEI) halted trading in government securities from January 16, 2003.

Introduction of Negotiated Dealing System (NDS)

The Reserve Bank of India (RBI) launched the Negotiated Dealing System (NDS) in February 2002 to enhance market transparency and transaction efficiency.
NDS significantly improved the operational efficiency by automating data flow into the settlement system.
It serves more effectively as a trade reporting platform rather than a direct trading platform.

Development of NDS-OM Platform

In August 2005, the NDS-OM platform was introduced as an electronic order matching system.
This innovation marked a significant shift towards a more transparent environment in the government securities market.

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Description

This quiz delves into the structure and functioning of the secondary market for government securities. It covers the role of OTC markets, the impact of NSE and BSE failures, and the introduction of the Negotiated Dealing System (NDS) by RBI. Understand the importance of transparency and operational efficiency in this financial sector.