Negotiated Dealing System Order Matching

  • The Negotiated Dealing System, or NDS, is an electronic trading platform operated by the Reserve Bank of India to facilitate the issuing and exchange of government securities and other types of money market instruments.
  • The goal was to reduce inefficiencies stemming from telephone orders and manual paperwork, while increasing transparency for all market participants.

Understanding Negotiated Dealing System (NDS)

  • The Negotiated Dealing System was introduced in February 2002 to help the Reserve Bank of India, or RBI, enhance the dealings of fixed income investments.
  • Prior to the NDS, the country’s government securities market was primarily telephone-based, which meant that buyers and sellers had to place trades over the phone, submit physical Subsidiary General Ledger transfer forms, and issue checks for the settlement of funds to the Reserve Bank of India. Negotiated Dealing System Order Matching
  • These slow and inefficient procedures led to the development and implementation of the NDS.
  • In August 2005, the RBI introduced the Negotiated Dealing System Order Matching system, or NDS-OM, an an electronic, screen-based, anonymous, order-driven trading system for dealing in government securities.
  • The system is designed to bring transparency to secondary market transactions, while enabling members to place bids and offers directly on the NDS-OM screen.
There are two types of NDS-OM members, including:
  • Direct Members – Direct members have current accounts with the RBI and can directly settle trades on NDS-OM.
  • Indirect Members – Indirect members do not have current accounts with the RBI and must settle through NDS-OM members that have direct accounts. Most foreign institutional investors have indirect access, while resident entities may have direct access.

Source: Investopedia

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