NDS-OM Trades No Longer Need Counterparty Confirmation
Current & verified — this is the latest version
Source: Reserve Bank of India · RBI/2005-06/132 · issued 22 Aug 2005 · ~1 min read
Quick answerRBI has exempted government securities trades matched on NDS-OM from physical counterparty confirmation, as CCIL acts as central counterparty for all such deals.
The rule, in the simplest words
If you trade government bonds (loans to the government) on NDS-OM (a computer system that matches buyers and sellers without showing their names), you do NOT need to get a separate okay from the other bank's back office (the team that checks trades).
CCIL (a company that acts like a middleman) is the only one you deal with for those NDS-OM trades, so you don't have to worry about the other bank not paying.
For all other government bond trades that are NOT done on NDS-OM, you still must get a physical confirmation (a signed paper or email okay) from the other bank's back office.
How it plays out — a real example
Ravi, a treasury back-office officer at a bank in Mumbai, used to spend hours calling other banks to confirm every government bond trade. Now, for trades matched on NDS-OM, he simply checks the system report and skips the confirmation step, saving time. But for a bond trade done over the phone, he still prints the deal slip and gets a signed confirmation from the counterparty's back office before settling.
What changed
Previously, all government securities transactions required physical confirmation by back offices of counterparties. With the introduction of NDS-OM on August 1, 2005, trades matched on this anonymous screen-based order matching module are now exempt from this requirement because CCIL is the central counterparty for all deals.
What it means for you
Banks and other regulated entities can reduce operational burden for NDS-OM trades, as counterparty confirmation is no longer needed. However, all other government securities transactions not matched on NDS-OM must still follow the existing physical confirmation process.
What you must do
Update internal procedures to skip counterparty confirmation for NDS-OM matched trades.
Ensure back offices continue physical confirmation for all non-NDS-OM government securities transactions.
Train staff on the distinction between NDS-OM and other trades for confirmation purposes.
Who it affects
All RBI regulated entities dealing in government securities, Back offices of banks and primary dealers, Clearing Corporation of India Ltd (CCIL)
❓ Common questions
Why is counterparty confirmation not needed for NDS-OM trades?
Because CCIL acts as the central counterparty for all NDS-OM matched deals, so each counterparty's exposure is only to CCIL, not to the matched entity.
Does this exemption apply to all government securities transactions?
No, it applies only to trades matched on NDS-OM. All other government securities transactions still require physical counterparty confirmation.
📜 Read the original circular — full text as issued by RBI
RBI/2005-06/132
IDMD.No. 766/10.26.65A/2005-06
August 22, 2005
All RBI Regulated Entities
NDS-OM – Counterparty Confirmation
The Negotiated Dealing System (NDS) for electronic dealing and reporting of transactions in government securities was introduced in February 2002. Subsequently, on August 1, 2005, RBI introduced the anonymous screen based order matching module on NDS, called NDS-OM.
2. As per extant guidelines, all government securities transactions have to be physically confirmed by the back offices of counterparties. With respect to transactions matched on the NDS-OM module, since CCIL is the central counterparty to all deals, exposure of any counterparty for a trade is only to CCIL, and not to the entity with whom a deal matches. Besides, details of all deals matched on NDS-OM are available to the counterparties as and when required by way of reports on NDS-OM itself. In view of the above, the need for counterparty confirmation of deals matched on NDS-OM does not arise.
3. However, all government securities transactions, other than those matched on NDS-OM, will continue to be physically confirmed by the back offices of the counterparties, as hitherto.
Yours faithfully
(B. Mahapatra)
Chief General Manager –in - Charge
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2005-06/132 · issued 22 Aug 2005. The plain-English explanation above is BankPulse’s own independent summary.
Update internal procedures to skip counterparty confirmation for NDS-OM matched trades.
⚙️ Operations
Ensure back offices continue physical confirmation for all non-NDS-OM government securities transactions.
📜 Compliance
Train staff on the distinction between NDS-OM and other trades for confirmation purposes.
Grouped from the action items above — a single circular may involve more than one team.
Worked example & action-note template
Example: if you are a Branch Manager at a bank this circular applies to (All RBI regulated entities dealing in government securities, Back offices of banks and primary dealers, Clearing Corporation of India Ltd (CCIL)), your first concrete step on “NDS-OM Trades No Longer Need Counterparty Confirmation” is: “Update internal procedures to skip counterparty confirmation for NDS-OM matched trades.” (RBI issued this 22 Aug 2005).
Circular: RBI/2005-06/132 -- NDS-OM Trades No Longer Need Counterparty Confirmation
Issued: 22 Aug 2005
Action required: Update internal procedures to skip counterparty confirmation for NDS-OM matched trades.
Action required: Ensure back offices continue physical confirmation for all non-NDS-OM government securities transactions.
Action required: Train staff on the distinction between NDS-OM and other trades for confirmation purposes.
Owner: ____________ Target date: ____________
Board/committee approval needed? Y / N
Evidence filed in compliance register on: ____________
Built only from this circular’s own published fields — not legal advice; always confirm against the official RBI source.
💬 Banker Discussion
Discuss this circular with fellow bankers — reply, upvote what helps, report what doesn’t belong. Be professional; no client data. Views are the commenter’s own, not BankPulse’s.
BankPulse Compliance Evidence Pack — generated 05 Aug 2026 · status cross-checked against RBI’s official withdrawal register (refreshed weekly). Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=2455&Mode=0 — Plain-English summary by BankPulse (bankpulse.ai), reviewed by our expert reviewer, CA Amit Jain. Independent platform, not affiliated with the Reserve Bank of India; is our own plain-English paraphrase, not RBI’s original wording.
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