Okay, here's the policy analysis report based on the provided text.
**1. Executive Summary:**
This report analyzes the "Reserve Bank of India Access Criteria for NDSOM Directions, 2024," a *new* policy issued on October 18, 2024, by the Reserve Bank of India (RBI). This policy revises and replaces previous circulars regarding access to the Negotiated Dealing System-Order Matching (NDSOM) electronic trading platform for Government Securities. The core purpose is to broaden direct access to NDSOM for a wider range of regulated entities and streamline the application process. Key findings indicate a shift towards greater participation in the Government Securities market and a more efficient access mechanism to the NDSOM platform.
**2. Introduction:**
This report aims to provide a comprehensive overview of the "Reserve Bank of India Access Criteria for NDSOM Directions, 2024," based solely on the information contained within the provided policy document. It details the policy's objectives, key provisions, target audience, implementation aspects, and expected outcomes.
**3. Policy Overview:**
* Core Objective(s): The primary objective of this policy is to revise the access criteria for the NDSOM platform, extending direct access to a broader set of regulated entities and streamlining the process for seeking direct access to NDSOM, either under these directions or through the existing Master Directions on Access Criteria for Payment Systems.
**4. Background and Rationale:**
* Since this is a *new* policy that rescinds older circulars, the problem this policy addresses appears to be the limitations or inefficiencies of the previous access criteria for NDSOM. The text indicates a need to "review" the existing guidelines and "streamline" the access process, suggesting that the older system was perhaps too restrictive or cumbersome. The goal is likely to foster greater participation and liquidity in the Government Securities market by making NDSOM more accessible.
**5. Key Provisions / Changes:**
This is a new policy so we describe all the changes:
* **Eligible Entities for Direct Access:** The policy defines the entities eligible for direct access to NDSOM. These include:
* Banks
* Standalone Primary Dealers
* Non-Banking Financial Companies (including Housing Finance Companies)
* All India Financial Institutions
* Mutual Funds
* Provident Funds
* Pension Funds
* Insurance Companies
* Regulated Market Infrastructure Institutions (MIIs) - under specific RBI permission.
* Any other entity the RBI may specifically permit.
* **Requirements for Direct Access:** Eligible entities must meet the following requirements:
* Maintain a Subsidiary General Ledger (SGL) account with the Reserve Bank.
* Maintain a Current account with the Reserve Bank or a Designated Settlement Bank.
* Be a member of the securities settlement segment of the Clearing Corporation of India Limited (CCIL).
* **Application Process:** Eligible entities meeting the specified requirements can apply for direct access through a specified application format sent to the Chief General Manager, Financial Markets Regulation Department, Reserve Bank of India. Alternatively, they can apply through the procedure stipulated under the Master Directions on Access Criteria for Payment Systems.
* **Granting of Access:** The Reserve Bank has the discretion to grant or reject direct access after assessing the applicant's eligibility. It can request additional information or seek clarifications, and it can also obtain recommendations from regulators or other relevant authorities.
* **Termination of Access:** The RBI reserves the right to suspend or terminate direct access if an entity ceases to be eligible, violates regulations, commits market abuse, violates access conditions, or if continued access is deemed prejudicial to public interest or the financial system.
* **Indirect Access:** Any entity eligible to invest in Government securities can avail indirect access to NDSOM through an entity with direct access, which assumes responsibility for settlement. Entities maintaining both SGL and constituent accounts can choose indirect access.
**6. Target Audience and Stakeholders:**
The target audience and stakeholders directly affected by this policy include:
* Banks
* Standalone Primary Dealers
* Non-Banking Financial Companies (including Housing Finance Companies)
* All India Financial Institutions
* Mutual Funds
* Provident Funds
* Pension Funds
* Insurance Companies
* Regulated Market Infrastructure Institutions
* Other entities eligible to invest in Government Securities
* Clearing Corporation of India Limited (CCIL)
* Designated Settlement Banks
**7. Implementation Aspects (Inferred):**
* **Responsible Agency:** The Financial Markets Regulation Department of the Reserve Bank of India is the primary responsible agency.
* **Timelines and Procedures:** The policy came into effect immediately on October 18, 2024. Eligible entities seeking direct access need to follow the application process outlined in the policy, including submitting the required documentation. The RBI will then assess applications and grant or reject access based on its discretion.
**8. Expected Outcomes / Impact of Changes:**
The likely intended outcomes of this policy are:
* **Increased Participation:** Broadening direct access to NDSOM should lead to increased participation in the Government Securities market.
* **Improved Liquidity:** Greater participation is expected to improve liquidity in the market.
* **Streamlined Access:** The streamlined application process should make it easier for eligible entities to gain access to NDSOM.
* **Enhanced Efficiency:** Direct access for more entities should improve the efficiency of trading and settlement processes.
**9. Conclusion:**
The "Reserve Bank of India Access Criteria for NDSOM Directions, 2024" represents a significant shift towards a more accessible and efficient Government Securities market. By broadening direct access to NDSOM and streamlining the application process, the RBI aims to increase participation, improve liquidity, and enhance overall market efficiency. This policy is crucial for promoting the development and stability of the Indian financial system.
Key Entities Referenced
State Governments: The governments of the states within India.
RESERVE BANK OF INDIA: The central bank of India, the issuer of the circular.
RBIFMRD202425124: Reference number for the circular issued by the Reserve Bank of India.
FMRD.MIOD.No.0411.01.041202425: Another reference number associated with the circular.
October 18, 2024: Date of the circular's issuance and effective date of the directions.
Government Securities market: The financial market to which the directions apply.
Reserve Bank of India Access Criteria for NDSOM Directions, 2024: The formal name of the directions being issued.
IDMD.DOD.No.589310.25.66200708: Reference number of a previously issued circular regarding access to NDSOM, dated May 27, 2008.
May 27, 2008: Date of the circular with reference number IDMD.DOD.No.589310.25.66200708.
IDMD.DOD.No.1310.25.66201112: Reference number of another previously issued circular regarding access to NDSOM, dated November 18, 2011.
November 18, 2011: Date of the circular with reference number IDMD.DOD.No.1310.25.66201112.
Negotiated Dealing SystemOrder Matching NDSOM: Electronic trading platform for government securities.
Master Directions on Access Criteria for Payment Systems: A set of guidelines governing access criteria for payment systems.
Master Direction DPSS.CO.OD.No.184604.04.009201617: Reference number of the Master Directions on Access Criteria for Payment Systems.
January 17, 2017: Date of the Master Direction DPSS.CO.OD.No.184604.04.009201617.
section 45W of the Reserve Bank of India Act, 1934: The section of the Reserve Bank of India Act, 1934 that grants the Reserve Bank the power to issue these directions.
Reserve Bank of India Act, 1934: The act that empowers the Reserve Bank of India.
Financial Markets Regulation Department: The department within the Reserve Bank of India responsible for these directions.
Central Office Building, 9th Floor, Shahid Bhagat Singh Marg, Fort, Mumbai 400001: Address of the Financial Markets Regulation Department of the Reserve Bank of India.
Dimple Bhandia: Chief General Manager at Reserve Bank of India.
section 45U of the Act: Another section of the Reserve Bank of India Act.
All India Financial Institution: A category of financial institutions including EXIM Bank, NABARD, NHB, SIDBI and NaBFID.
ExportImport Bank of India: An All India Financial Institution also referred to as EXIM Bank.
EXIM Bank: An All India Financial Institution.
National Bank for Agriculture and Rural Development: An All India Financial Institution also referred to as NABARD.
NABARD: An All India Financial Institution.
National Housing Bank: An All India Financial Institution also referred to as NHB.
NHB: An All India Financial Institution.
Small Industries Development Bank of India: An All India Financial Institution also referred to as SIDBI.
SIDBI: An All India Financial Institution.
National Bank for Financing Infrastructure and Development: An All India Financial Institution also referred to as NaBFID.
NaBFID: An All India Financial Institution.
Bank: Defined as a banking company, Local Area Bank, Payment Bank, Small Finance Bank, regional rural bank, a corresponding new bank or State Bank of India, or a cooperative bank.
Banking Regulation Act, 1949: Act defining various types of banks.
Designated Settlement Bank: A bank appointed by the Clearing Corporation of India Limited (CCIL) for settlement.
Clearing Corporation of India Limited: Entity responsible for the settlement of fund obligations, also referred to as CCIL.
CCIL: Entity responsible for the settlement of fund obligations.
Direct Access: Access to NDSOM where the entity directly executes/reports the transaction and settles it in its own SGL account.
Subsidiary General Ledger: Account used for settling transactions, also referred to as SGL.
SGL: Account used for settling transactions.
Electronic Trading Platform: Platform as defined in Section 21 iii of the Electronic Trading Platforms Reserve Bank Directions, 2018 dated October 05, 2018, also referred to as ETP.
ETP: Platform as defined in Section 21 iii of the Electronic Trading Platforms Reserve Bank Directions, 2018 dated October 05, 2018.
Electronic Trading Platforms Reserve Bank Directions, 2018: Directions related to electronic trading platforms.
October 05, 2018: Date of the Electronic Trading Platforms Reserve Bank Directions, 2018.
Government Security: As defined in Section 2f of the Government Securities Act, 2006.
Government Securities Act, 2006: Act defining government securities.
Indirect Access: Access to NDSOM through an entity that has direct access.
NonBanking Financial Company: As defined in Section 45I f of the Act.
Government of India: The government of India.
Standalone Primary Dealers: Entities eligible for direct access to NDSOM.
Housing Finance Companies: Included within Non-Banking Financial Companies.
Mutual Funds: Entities eligible for direct access to NDSOM.
Provident Funds: Entities eligible for direct access to NDSOM.
Pension Funds: Entities eligible for direct access to NDSOM.
Insurance Companies: Entities eligible for direct access to NDSOM.
Regulated Market Infrastructure Institutions: Entities eligible for direct access to NDSOM, also referred to as MIIs.
MIIs: Entities eligible for direct access to NDSOM.
Reserve Bank of India Prevention of Market Abuse Directions, 2019: Directions related to preventing market abuse.
March 15, 2019: Date of the Reserve Bank of India Prevention of Market Abuse Directions, 2019.
SGL Account: Eligibility Criteria and Operational Guidelines Notification no. IDMD.CDD.S78811.22.001202122: Notification related to SGL account eligibility.
September 22, 2021: Date of the SGL Account Notification no. IDMD.CDD.S78811.22.001202122.
RESERVE BANK OF INDIA
www.rbi.org.in
RBI/FMRD/2024-25/124
FMRD.MIOD.No.04/11.01.041/2024-25 October 18, 2024
To
All participants in Government Securities market
Madam/Sir,
Reserve Bank of India (Access Criteria for NDS-OM) Directions, 2024
A reference is invited to circulars IDMD.DOD.No.5893/10.25.66/2007-08 dated May 27,
2008 and IDMD.DOD.No.13/10.25.66/2011-12 dated November 18, 2011 issued by the
Reserve Bank on guidelines relating to access to Negotiated Dealing System-Order
Matching (NDS-OM) electronic trading platform.
2. The access criteria for the NDS-OM platform contained in the aforesaid circulars have
been reviewed. Direct access to NDS-OM has been extended to a broader set of regulated
entities and the process for seeking direct access to NDS-OM under these Directions or
through the procedure stipulated under the Master Directions on Access Criteria for
Payment Systems (Master Direction DPSS.CO.OD.No.1846/04.04.009/2016-17 dated
January 17, 2017) as amended from time to time, has been streamlined.
3. Directions to notify the revised access criteria for NDS-OM platform are being issued
herewith.
4. Accordingly, circulars IDMD.DOD.No.5893/10.25.66/2007-08 dated May 27, 2008 and
IDMD.DOD.No.13/10.25.66/2011-12 dated November 18, 2011 issued by the Reserve
Bank shall stand withdrawn. Direct access to NDS-OM granted in terms of these circulars
shall be deemed to have been granted under these Directions and shall be governed by
these Directions from the date they come into effect.
5. These Directions have been issued by the Reserve Bank in exercise of the powers
conferred under section 45W of the Reserve Bank of India Act, 1934 and of all the powers
enabling it in this behalf.
�वत्तीय बाज़ार �व�नयमन �वभाग,केंद्र�य कायार्लय भवन, नौवीं मंिजल, शह�द भगत �सहं माग,र् फोटर्, मुंबई–400001.भारत
फोन: (91-22) 2260 1000, ई-मेल: cgmfmrd@rbi.org.in
Financial Markets Regulation Department, Central Office Building, 9th Floor, Shahid Bhagat Singh Marg, Fort, Mumbai – 400001. India
Tel: (91-22) 2260 1000, e-mail- cgmfmrd@rbi.org.in
�हन्द� आसान है, इसका प्रयोग बढ़ाइए6. These Directions shall be applicable with immediate effect.
Yours faithfully,
(Dimple Bhandia)
Chief General Manager
2RESERVE BANK OF INDIA
FINANCIAL MARKETS REGULATION DEPARTMENT
9th FLOOR, CENTRAL OFFICE, FORT
MUMBAI 400 001
Notification No. FMRD.MIOD.05/11.01.041/2024-25 dated October 18, 2024
Reserve Bank of India (Access Criteria for NDS-OM) Directions, 2024
In exercise of the powers conferred under section 45W of the Reserve Bank of India Act,
1934 (hereinafter called the Act) read with section 45U of the Act, the Reserve Bank of
India (hereinafter called the Reserve Bank) hereby issues the following Directions to all
the persons eligible to participate or transact business in Government securities market in
India.
1. Short title, extent, commencement and application.
a) These Directions shall be called the Reserve Bank of India (Access Criteria for
NDS-OM) Directions, 2024.
b) These Directions shall come into force with effect from October 18, 2024.
2. Definitions:
In these Directions, unless the context otherwise requires:
a) “All India Financial Institution” shall mean Export-Import Bank of India (EXIM
Bank), National Bank for Agriculture and Rural Development (NABARD), National
Housing Bank (NHB), Small Industries Development Bank of India (SIDBI) and
National Bank for Financing Infrastructure and Development (NaBFID);
b) “Bank” shall mean a banking company (including a Local Area Bank, a Payment
Bank and a Small Finance Bank) as defined in clause (c) of section 5 of the
Banking Regulation Act, 1949 or a “regional rural bank”, a “corresponding new
bank” or “State Bank of India” as defined in clauses (ja), (da) and (nc), of section
5 respectively thereof, or a “cooperative bank” as defined in clause (cci) of section
5 read with section 56 of the said Act;
c) “Designated Settlement Bank (DSB)” shall mean a bank appointed by the
Clearing Corporation of India Limited for the settlement of fund obligations of
members of their securities settlement segment that are not maintaining a current
account with the Reserve Bank;
3d) “Direct Access” shall mean access to NDS-OM wherein an entity that is party to a
transaction directly executes/reports the transaction on/to the platform and such
transactions are settled in its own Subsidiary General Ledger (SGL) account;
e) “Electronic Trading Platform (ETP)” shall have the same meaning as assigned
to it in Section 2(1) (iii) of the Electronic Trading Platforms (Reserve Bank)
Directions, 2018 dated October 05, 2018, as modified from time to time;
f) “Government Security” shall have the same meaning as assigned to it in Section
2(f) of the Government Securities Act, 2006;
g) “Indirect Access” shall mean access to NDS-OM wherein an entity undertakes its
transactions through another entity that has a direct access to NDS-OM and which
assumes responsibility for settlement of such transactions;
h) “Negotiated Dealing System-Order Matching (NDS-OM)” shall mean the ETP
authorised by the Reserve Bank under the Electronic Trading Platforms (Reserve
Bank) Directions, 2018 dated October 05, 2018, for transactions in Government
securities;
i) “Non-Banking Financial Company” shall have the same meaning as assigned to
it in Section 45-I (f) of the Act.
Words and expressions used, but not defined in these Directions, shall have the
same meaning as assigned to them in the Act or under the Government Securities
Act, 2006.
Section – I: Access
3. Any person/entity eligible to invest in Government securities in terms of the applicable
rules/ guidelines issued by the Government of India / State Governments / the Reserve
Bank, as amended from time to time shall be eligible to access NDS-OM either through
direct access or through indirect access.
Section – II: Direct access to NDS-OM
4. Eligible Entities
The following entities shall be eligible for direct access to NDS-OM subject to fulfilment
of all requirements and conditions stipulated in these Directions:
a) Banks;
b) Standalone Primary Dealers;
4c) Non-Banking Financial Companies including Housing Finance Companies;
d) All India Financial Institutions;
e) Mutual Funds;
f) Provident Funds;
g) Pension Funds;
h) Insurance Companies;
i) Regulated Market Infrastructure Institutions (MIIs) for investing their settlement
guarantee fund in Government securities, as the Reserve Bank may specifically
permit subject to such terms and conditions that it may prescribe; and
j) Any other entity that the Reserve Bank may specifically permit.
5. Requirements for seeking direct access to NDS-OM
Entities that are eligible to seek direct access to NDS-OM shall fulfil the following
requirements:
a) SGL account with the Reserve Bank;
b) Current account with the Reserve Bank or a Designated Settlement Bank; and
c) Membership of securities settlement segment of Clearing Corporation of India
Limited (CCIL).
6. Application for seeking direct access to NDS-OM
Entities eligible for direct access to NDS-OM in terms of paragraph (4) of these
Directions and meeting the requirements stipulated in paragraph (5) of these
Directions may seek direct access through an application in the format given
in Annex to the Chief General Manager, Financial Markets Regulation Department,
Reserve Bank of India, 9th Floor, Central Office Building, Shahid Bhagat Singh Marg,
Mumbai – 400001. Such entities may, alternatively, seek direct access through the
procedure stipulated under the Master Directions on Access Criteria for Payment
Systems (Master Direction DPSS.CO.OD.No.1846/04.04.009/2016-17 dated January
17, 2017) as amended from time to time.
7. Grant of direct access to NDS-OM
a) The Reserve Bank may, after being satisfied that the applicant fulfils the eligibility
criteria, grant direct access to NDS-OM subject to the terms and conditions
stipulated therein.
b) While granting access the Reserve Bank may
5i. call for any additional information or seek any clarification from the applicant
which in its opinion is relevant and the applicant shall furnish such additional
information and clarification; and
ii. obtain any additional information / recommendation from regulators or
agencies or any other authority, which in its opinion is relevant for disposal
of the application.
c) Direct access to NDS-OM granted to an entity is not transferable and the Reserve
Bank may impose additional conditions if the entity is found to violate the
provisions of these Directions or any other rules or regulations or conditions of
access.
d) The Reserve Bank may suspend/terminate the direct access to NDS-OM issued
to an entity, after affording a reasonable opportunity to be heard, if it is satisfied
that:
i. the entity has ceased to be eligible for direct access to NDS-OM; or
ii. the entity has violated a statutory provision or any rule or regulation or
direction or order or instruction issued by the Reserve Bank; or
iii. the entity has committed a market abuse as defined under the Reserve
Bank of India (Prevention of Market Abuse) Directions, 2019 dated March
15, 2019, as amended from time to time; or
iv. the entity has violated any of the terms or conditions stipulated by the
Reserve Bank while granting access; or
v. the continuance of access is prejudicial to public interest or financial system
of the country.
e) The decision of the Reserve Bank, to grant or reject direct access to NDS-OM or
to terminate the direct access, would be final.
Section – III: Indirect access to NDS-OM
8. Any person/entity eligible to invest in Government securities may avail indirect access
to NDS-OM if:
a) it is not an entity eligible for direct access to NDS-OM in terms of paragraph 4 of
these Directions; or
b) it does not satisfy the requirements to seek direct access to NDS-OM in terms of
paragraph 5 of these Directions; or
6c) it is not granted direct access to NDS-OM.
9. Indirect access to NDS-OM shall be through an entity which has a direct access to
NDS-OM, and which agrees to assume responsibility to settle the transactions
undertaken by the entity seeking indirect access.
10. Any entity that is permitted to maintain both a SGL and a constituent account in terms
of the SGL Account: Eligibility Criteria and Operational Guidelines (Notification no.
IDMD.CDD.S788/11.22.001/2021-22 dated September 22, 2021), as amended from
time to time, may at its discretion, choose to avail indirect access to NDS-OM, instead
of direct access.
(Dimple Bhandia)
Chief General Manager
7