• Investment World
• eWorld
• Brand Line
• Mentor
• Life
• Canvas
• Praxis
• Urban Pulse
• Brand Quest
• The New Manager

Stocks

• Quotes
• SE Diary
• Scoreboard
• Open-End Mutual Fund

Cross Currency

• Rates
  
  

Shipping

• Ports
  
  

Archives

• Yesterday
• Datewise
• Resources
• In Focus
• In Depth

Group Sites

• The Hindu
• The Hindu ePaper
• Business Line
• Business Line ePaper
• Sportstar
• Frontline
• The Hindu eBooks
• The Hindu Images

Our Bureau

"Currently, when-issued trading is limited to reissuances only. We are planning to extend it to new issuances as requested by market participants."

Mumbai , Sept. 27

The Reserve Bank of India (RBI) may extend `when-issued' trading in the Government securities market to new issuances.

`When-issued' indicates the conditional sale of a security that has been authorised but not yet issued and paid for. All when-issued transactions are on a conditional basis until the security is delivered and bought.

Ms Shyamala Gopinath, Deputy Governor, RBI, said the introduction of `when-issued' trading and short-selling in G-sec markets in the last few months were among the important liberalisation measures introduced in the securities market. "Currently, when-issued trading is limited to reissuances only. We are planning to extend it to new issuances as requested by market participants," she said. Ms Gopinath was speaking at a FICCI seminar on global banking.

Sounding a warning, Ms Gopinath said the rapid proliferation of derivative exposures posed a challenge due to the downside risks associated with them. "There are issues relating to use of structured products, valuation, counter-party related risks, risk management and reporting. While derivatives facilitate risk hedging and risk transfer to institutions more willing to bear the risks, the tendency of participants to assume excessive leverage and lack of prudential accounting guidelines are matters of concern," she said.

The Deputy Governor was also worried over a few players dominating derivatives trading.

"Concentration of knowledge is another risk which results in the concentration of derivative activity among few players," she said.

The combined share of the top 15 banks has steadily grown from around 74 per cent in March 2002 to 82 per cent of the total Offshore Banking Service exposures of the banking system in March 2006. Of this, 62 per cent was accounted for by foreign banks.

More Stories on : Financial Policy | RBI & Other Central Banks | Govt Bonds

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Low pressure in Bay may stay put

Copyright © 2006, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line