@Bhuvan :- I’ve query concerning the bond market typically. Why is the bond market so fragmented and worse that retail is disregarded from participation. In liquidity perspective its a headache for retail to dispose off bonds.
I imply one there’s CCIL the place the lot measurement is approach excessive just for large establishments to mess around together with HNI and VHNI. There isn’t a lot liquidity in odd heaps in any respect
One other market is NSE the place RBI thinks bonds should rotate amongst retailer however no retailer desires to carry bonds for very long time and therefore illiquidity
My query why cant they carry one cease market like in CCIL possibly scale back lot measurement in order that large establishments can promote/purchase from retailers ? I do know even RBI buys again bonds from CCIL, why cant they scale back lot measurement in order that even retailers get the profit?
raoawesome:
why cant they scale back lot measurement in order that even retailers get the profit?
The problem with bonds is just not the lot-size, that’s solved already on BSE/NSE.As is clear from NSE/BSE there’s not a lot participation even with decreased lot-size.
The problem is the sheer variety of bonds.Take the case of Govt. bonds itself.There are greater than 1500 Govt. bonds that provide the identical degree of sovereign guaranteejust with various returns and maturity schedules.
IMHO, it’s not potential for people to watch that many variety of bonds manually.AFAIK, there aren’t any widespread productsthat permit people to specific their curiosity within the bond market.
I feel there’s a want for a productthat permits an indvidual to say the next –
Hiya different people on the trade,i’ve N Lacs and i’ll purchase any bond on this checklist [A, B, C, …] you might sellthat mature anytime upto the subsequent X yearsat a charge such that i successfully obtain atleast Y % (dividend + capital-gains)
Observe: I end-up doing a part of the above utilizing a script that screens Ask/Bids on NSE/BSE,and manually inserting bids utilizing Restrict orders each time somebody gives Govt. bonds on the trade.
IIUC, the problem in creating the above product is NOT the tech.Relatively, think about an consumer that has money N lac,how does one present them a margin to concurrently bid for (Supply order) of N lac on 100-200 related bonds,with the belief that the consumer is completely satisfied to buy a complete of N lac price of any of those bonds.(i.e. purchase N lacs price of any of the bonds on the consumer checklist that get provided on the market in the marketplace first.)
Observe, that you will need to not simply allow the consumer to purchase the bonds,however, additionally vital to publicly specific their curiosity to purchase sure bonds.i.e. allow the consumer to concurrently bid on every of the bonds within the marketso that any potential sellers of any of the bonds know that that there’s curiosity in shopping for at a particular charge.
One other, subsequent problem is the tight circuit-limits (5-10%) in exchanges round bondsthat forestall buyer-seller at buying and selling bonds at a big low cost / premium.
raoawesome:
:- I’ve query concerning the bond market typically. Why is the bond market so fragmented and worse that retail is disregarded from participation. In liquidity perspective its a headache for retail to dispose off bonds.
This isn’t simply in India however globally. Liquidity on the exchanges is nearly nonexistent. Even within the US, there are quite a few off-exchange venues and platforms like Tradeweb to resolve this difficulty.
raoawesome:
I imply one there’s CCIL the place the lot measurement is approach excessive just for large establishments to mess around together with HNI and VHNI. There isn’t a lot liquidity in odd heaps in any respect
Lot sizes aren’t a problem, as @cvs talked about. The minimal funding in Govt bonds is Rs 10,000. Plus, SEBI lately decreased the face worth of privately positioned company bonds to Rs 1 lakh from Rs 10 lakh. This will scale back additional.
raoawesome:
One other market is NSE the place RBI thinks bonds should rotate amongst retailer however no retailer desires to carry bonds for very long time and therefore illiquidity
It’s the opposite approach round. Since bonds, by their nature are supposed to be held to maturity, I dont assume anticipating them to commerce as actively as shares is the best expectation.
raoawesome:
My query why cant they carry one cease market like in CCIL possibly scale back lot measurement in order that large establishments can promote/purchase from retailers ? I do know even RBI buys again bonds from CCIL, why cant they scale back lot measurement in order that even retailers get the profit?
This fragmentation is a matter. Right this moment, all govt bonds commerce on NDS, a platform run by RBI/CCIL. On the identical time, all these bonds are additionally listed on NSE and BSE. So the identical set of bonds are buying and selling on two separate platforms. In an excellent world SEBI and RBI ought to work collectively to take away this framentation.
I positioned an order for gsec on coin net, how will i pay for it? Does it get deducted from my steadiness on kite or do i must pay coin seperately or straight from my checking account?