What changed
RBI referred to its December 2019 circular on the price/yield range setting facility in e-Kuber, which allows participants to set a maximum and minimum bid value in price or yield terms per security per auction. The facility validates bids automatically against these limits. RBI noted that some participants still haven't implemented this, leading to fat-finger errors, and now advises all to use it before bidding.
What it means for you
Banks and other G-Sec market participants must integrate the price/yield range setting into their auction workflows to avoid bid errors. This reduces operational risk and ensures no bid cancellations post-auction, tightening discipline. Non-compliance could lead to financial losses from erroneous bids that cannot be reversed.
What you must do
- Enable the price/yield range setting facility in e-Kuber for all G-Sec primary market auctions before placing bids.
- Train your treasury and dealing teams on setting and modifying bid ranges (price or yield) per security per auction.
- Review your internal systems to ensure automatic validation of bids against set limits to prevent fat-finger errors.
- Update your operational risk policies to reflect that no bid cancellation requests will be entertained after auction close.
Who it affects
All participants in the Government Securities market, Treasury departments of banks and primary dealers, Risk management teams handling e-Kuber operations
What is the price/yield range setting facility in e-Kuber?
It allows a market participant to define a maximum and minimum value for bids in price or yield terms for each security in every auction. Bids are automatically validated against these limits, preventing fat-finger errors.
Can we modify the range during an auction?
Yes, the range can be set before the auction and modified during the auction, as per the circular.
What happens if we don't use this facility and make an error?
RBI will not entertain any request for cancellation of bids after the auction window closes. You must use the facility to avoid such errors.