What changed
Previously, primary dealers had to exchange written confirmations for each OTC government securities trade, with back offices monitoring timely receipt. The RBI has now waived this requirement, citing that reporting on the Negotiated Dealing System (NDS) and guaranteed settlement through the Clearing Corporation of India Limited (CCIL) provide sufficient controls.
What it means for you
This reduces paperwork and operational burden for primary dealers, streamlining post-trade processes for government securities. However, dealers must still maintain strict front-office/back-office separation and adhere to NDS reporting rules. Banks conducting PD activities departmentally should follow separate guidelines from RBI's Department of Banking Operations & Development.
What you must do
- Stop exchanging written trade confirmations for OTC government securities trades, effective immediately.
- Ensure clear functional separation between front and back offices as per existing guidelines.
- Continue meticulous trade reporting on the Negotiated Dealing System (NDS) as per its regulations.
- If your bank conducts PD activities departmentally, refer to DBOD guidelines for applicable procedures.
Who it affects
All standalone primary dealers, Banks undertaking PD activities departmentally
Why did RBI waive the written confirmation requirement?
Because OTC trades are now reported on NDS and settled through CCIL, which provides guaranteed settlement and automated confirmation, making separate written confirmations redundant.
Does this waiver apply to banks that do PD activities departmentally?
No, such banks must follow separate guidelines issued by RBI's Department of Banking Operations & Development (DBOD) for trade confirmations.
What are the key compliance requirements that remain?
Primary dealers must maintain clear front-office/back-office separation and ensure timely and accurate reporting of all OTC trades on NDS.