Questions and Answers
What is the primary type of market for trading government securities?
What technological system was introduced by the RBI to improve transparency in the government securities market?
Which statement about the Negotiated Dealing System (NDS) is accurate?
When did the RBI launch the NDS-OM platform?
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What is the primary role of the NDS in the government securities market?
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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.
