Negotiated Dealing System (NDS)

What Is the Negotiated Dealing System (NDS)?

The Negotiated Dealing System, or NDS, is an electronic trading platform worked by the Reserve Bank of India (RBI) to work with the giving and exchange of government securities and other types of money market instruments.

The goal of the NDS was to reduce shortcomings originating from telephone orders and manual desk work while expanding transparency for all market participants.

Figuring out the Negotiated Dealing System

The Negotiated Dealing System was acquainted in February 2002 with assistance the Reserve Bank of India, or RBI, improve the dealings of fixed-income investments. While the RBI claims the NDS, it is administered by the Clearing Corporation of India Ltd. (CCIL).

Prior to the NDS, the country's government securities market was essentially telephone-based, which implied that purchasers and merchants needed to place trades over the telephone, submit physical Subsidiary General Ledger transfer forms, and issue checks for the settlement of funds to the Reserve Bank of India. These sluggish and wasteful strategies prompted the development and implementation of the NDS.

In August 2005, the RBI presented the Negotiated Dealing System - Order Matching system, or NDS-OM, an electronic, screen-based, anonymous, order-driven trading system for dealing in government securities. The system is intended to carry transparency to secondary market transactions while empowering members to place offers and offers directly on the NDS-OM screen.

How the NDS Works

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 don't 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 elements might have direct access.

Numerous other countries have comparable electronic systems in place for overseeing government securities, money market accounts, and related securities to increase transparency and lower costs.

For more data about the Negotiated Dealing System, see the RBI's Negotiated Dealing System Overview.

NDS Modules

The Negotiated Dealing System comprises of two modules, which are intended for various types of member institutions.

These modules include:

Primary Market Module: The RBI involves the primary auction platform for the auction of federal and state securities, as well as treasury bills. The platform empowers participants to electronically present their offers in primary auctions and receive allotment reports.
Secondary Market Module: Over-the-counter trading frequently occurs over the telephone, however everybody is required to report these trades utilizing the NDS secondary market module. The data then flows to the Clearing Corporation of India Ltd. for clearing and settlement, which keeps away from the requirement for paper-based settlement processes.

Features

Every member type approaches specific modules inside the NDS-OM system.
The NDS order matching system (NDS-OM) highlights two levels of market participation.
The Negotiated Dealing System (NDS) works with trading and dealing in Indian government securities.