Investing Trends

C Type B BhaveTaking a measure forward towards development of the domestic debt market, the Securities and Exchange Board of Republic Of India (Sebi) on Wednesday brought common finances (MFs) on a par with primary debt dealers, Banks and coverage companies.

At a board meeting held at its central office in Mumbai, Sebi on Wednesday decided to let common finances to sell authorities securities (G-sec) contracted for purchase in the DVP-III mode.

Under the DVP-III manner of settlement, it is possible to sell authorities securities already contracted for purchase without taking delivery, provided the dealing is guaranteed by an approved cardinal counter-party, namely, the Clearing Corporation of India.

According to current guidelines, a sale of authorities securities is permitted only if MFs actually throw the securities in their portfolio.

Fund directors said the alterations in the existent guidelines were expected to better liquidness in the authorities securities marketplace by enabling the sale of authorities securities on the twenty-four hours of purchase, thereby reducing the terms hazard on the portion of marketplace participants.

"It would ease a better direction of debt finances as directors would be able to take advantage of intra-day volatility," said Ashish Nigam, head, fixed income, Religare-Aegon MF.

However, monetary fund directors are of the position that this is a much delayed determination taken by Sebi as the Modesty Depository Financial Institution of Republic Of India had allowed the DVP-III colony for all marketplace participants manner back in 2004.

Managers also said while DVP-III colony would let MFs to short-sell government securities, it would, however, necessitate separate guidelines from the working capital marketplace regulator.