WI Transactions: Cover Leg Now Allowed Outside NDS-OM
No longer current — withdrawn, no replacement on file yet
Source: Reserve Bank of India · RBI/2007-2008/221 · issued 01 Jan 2008 · ~2 min read
Quick answerRBI now permits the cover leg of When Issued (WI) transactions in central government securities to be executed outside the NDS-OM platform, i.e., via telephone market. The originating trade must still occur on NDS-OM. This change aims to enhance flexibility in WI trading.
The rule, in the simplest words
The first trade (buying or selling a 'When Issued' security, which is a promise to buy/sell a government bond before it is actually issued) must happen on the NDS-OM platform (a computer system for trading bonds).
The second trade (the 'cover leg', which is like a backup trade to reduce risk) can now be done outside NDS-OM, for example by calling another bank on the phone.
Banks must keep track of all their 'When Issued' trades, both the ones on the computer system and the ones done by phone, to make sure they don't go over their allowed limits.
This new rule starts only after the Reserve Bank updates the computer system so banks can report phone trades. The bank will tell everyone when that happens.
How it plays out — a real example
Ravi, a treasury officer in Indore, is also responsible for government bond trades. He sells a 'When Issued' security on the NDS-OM platform. Later, to cover his risk, he calls a dealer at another bank and agrees to buy the same security over the phone. Ravi makes sure his team records this phone trade in their internal system so they don't exceed their trading limits.
What changed
Previously, all legs of WI transactions had to be executed on the NDS-OM platform. Now, the cover leg can be done off-platform, such as through telephone market, while the originating sale or purchase must remain on NDS-OM. This follows the Mid-Term Review of the Annual Policy Statement 2007-08.
What it means for you
Banks and other NDS-OM members gain more flexibility in managing WI positions by hedging or covering trades via telephone, potentially reducing costs and improving execution speed. However, they must ensure robust internal controls to monitor WI limits across both on- and off-platform trades. The change becomes effective after necessary NDS software modifications are completed.
Historical instruction — do not use for current compliance. This is what was required at the time; it no longer reflects current RBI requirements. If no replacement rule is linked above, that only means none is recorded on our register yet — it does not prove no later applicable rule exists. Confirm on the official RBI source below.
What banks were required to do at the time
Review and update internal controls to monitor WI limits considering cover trades done both on and outside NDS-OM.
Ensure that all originating WI trades (sale or purchase) continue to be executed only on the NDS-OM platform.
Prepare for operational readiness once RBI communicates the software modifications enabling reporting of off-platform WI trades on NDS.
Train trading and risk management teams on the new flexibility and compliance requirements.
Who it affects
All NDS-OM members, Banks and primary dealers trading in central government securities, Treasury and risk management teams handling WI transactions
❓ Common questions
Regulatory timeline
Decoded by BankPulse2026-06-19 14:41 IST
Status change: superseded2026-07-13T04:47:15
Built from our lineage records — each fact carries its provenance; missing history simply is not shown (never guessed).
What is a 'cover leg' in WI transactions?
The cover leg refers to the offsetting trade that closes out or hedges the original WI position. This circular allows that leg to be done outside NDS-OM, e.g., via telephone.
When will this change become effective?
It becomes operational after RBI completes necessary software modifications for reporting off-platform WI trades on NDS. RBI will communicate the effective date separately.
Does this change affect the original WI trading guidelines?
No. All other terms and conditions from earlier circulars remain unchanged. Only the cover leg execution venue is expanded.
📜 Read the original circular — full text as issued by RBI
This circular has been superseded by When Issued Transactions (Reserve Bank) Directions, 2018 dated July 24, 2018 .
RBI/2007-2008/221
IDMD.DOD.No. 3166 /11.01.01(B)/ 2007-08
January 01, 2008
All NDS-OM members
Dear Sirs,
‘When Issued (WI)’ transactions in Central Government Securities
As part of restructuring of the debt issuance framework in the light of the Fiscal Responsibility and Budget Management (FRBM) Act, 2003, ‘When Issued (WI)’ transactions in re-issues of the Central Government dated securities were permitted vide circular IDMD.No/3426 /11.01.01 (D)/2005-06 dated May 3, 2006 . The same was extended to newly issued securities vide IDMD.No/2130 / 11.01.01 (D)/ 2006-07 dated November 16, 2006 .
2. As per the above guidelines, ‘WI’ transactions are permitted to be undertaken only on the Negotiated Dealing System- Order Matching (NDS-OM) platform. In terms of the announcement made vide paragraphs 126 and 127 of the Mid-Term Review of the Annual Policy Statement 2007-08, it has now been decided to permit undertaking of the cover leg of the ‘WI’ transactions even outside the NDS-OM platform, i.e., through telephone market. The originating transactions (sale or purchase of ‘WI’ securities) shall continue to be undertaken on the NDS-OM platform only .
3. The above measure will be made operational once the necessary software modifications for enabling reporting of ‘WI’ trades on NDS are carried out. This will be separately communicated to the market participants.
4. All entities permitted to undertake ‘WI’ trading may put in place proper internal controls and systems to ensure that the ‘WI’ limits are adhered to, taking into account the cover operations done both on and outside the NDS-OM platform.
5. All other terms and conditions specified in the above circulars remain unchanged.
Yours faithfully,
(K. V. Rajan)
Chief General Manager
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2007-2008/221 · issued 01 Jan 2008. The plain-English explanation above is BankPulse’s own independent summary.
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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=3992&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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