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RBI mulls computerised money markets for efficiency, transparency

The Reserve Bank of India has drawn ambitious plans to introduce electronic trading in the money markets, computerise its Public Debt Office and make the trading in interbank repo market standardised and efficient.

Dr Y Venugopal Reddy, deputy governor, told a seminar in Bombay on Thursday that the objective of the whole exercise is to make trading in the money markets more transparent and efficient.

''The RBI is actively co-ordinating with the Primary Dealers Association in developing an electronic dealing system to facilitate dealing in money markets, government securities and other debt instruments. This will lend transparency and efficiency to the market operations and enable the RBI to monitor the market developments on-line,'' he said.

A shift from the negotiated telephone dealing market to the screen-based system would enable on-line availablity of full information about the volume and price of the transacted security, he said.

''An information gap exists between the deal date, contract date and actual settlement date,'' he said and stated that screen-based trading would obviate this shortcoming. Computerisation of the PDO would link them with treasury offices of banks. He added that this linkage may be extended to primary/satellite dealers and stock exchanges.

Reddy hinted that the RBI is toying with the idea of providing terminals to the money market participants to enable them to tender bids in auctions and provide other information on the central bank's announcements.

''The entire auction process including allotment, determining and communicating payment amount and advising successful and rejected bids to bidders would be on-line,'' he said.

UNI

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