Government bonds (G-secs) are now listed on the exchanges

[TradeXMaster]

@Bhuvan

We are done answering all your pointless questions over and over again.

[MSDGOES]

Once I apply for the GSEC from COIN, How many days it will take to reflect in holdings & when it will be listed?

[viswaram]

@ShubhS9 are the gsec etf offered by lic and sbi really worth over the direct bond purchases?

LICNETFGSC INF767K01MV5

SETF10GILT INF200KA1JT1

NETFLTGILT INF204KB1882

I wasnt able to find the returns data, but their portfolio holdings showed investment in 100% bonds over 6%

What’s your point of view?

[Rohan_Rajput]

Government of India has decided to list all the outstanding Government bonds (G-secs) on the exchanges for electronic trading. It will help in better price discovery and make it easier for traders to get their Mutual Fund needs. Government bonds, also known as G-secs, are debt securities issued by the government of India to finance its expenditure. These bonds are issued in various denominations and have a tenure of up to 30 years.

[viswaram]

Do you have the RBI circular on this - need to know whats changing. Already most of the Gsecs are available to trade

well the liquidity is near zero though

[DTJ]

Hi There
I’m puzzled. From what I understand, T-Bills will not be considered as collateral for margin, however Liquid MF / ETF’s and of course Gsec bonds are. Why is it such? Aren’t T-bills as good as liquid MF/ETF’s, if not better? Any valuable insights is welcome.

[ShubhS9]

@DTJ

I’m puzzled. From what I understand, T-Bills will not be considered as collateral for margin, however Liquid MF / ETF’s and of course Gsec bonds are. Why is it such? Aren’t T-bills as good as liquid MF/ETF’s, if not better? Any valuable insights is welcome.

Hi @DTJ, owing to complexities in unpledging T-Bills nearing maturity, they cannot currently be pledged.

[BB789]

Updates 2024:

• Tbill 364 can now be pledged
• Tbills are tradeable.
• TBill Ticker is in format - [PP]D[MM][DD][YY]-TB , where
  • PP = period eg: 91
  • MMDDYY- Expiry date: 020524 for T bill maturing on May 2, 2024
  • Eg: 364D020125-TB is 364 day T bill maturing on Jan 2, 2025

@Bhuvan @ShubhS9 Please update main post and Varsity.
cc: @DTJ

[smakkar]

Very strange but just got an email from Zerodha stating that “The clearing corporation has stopped providing margin against the shares of 736GS2052 and has removed it from the approved list of securities for margin pledge.”

This is a Govt of India issued bond so why would the Clearing Corporation remove it from their list when the maturity is a long way away?

This can create a serious situation for someone who might not have ready cash available to meet the margin requirement for open positions once the auto-unpledge happens and the available margin reduces…

Did any one else get similar emails for this or any other GoI bonds? Any idea why this would happen?

[Bhuvan]

@smakkar

Did any one else get similar emails for this or any other GoI bonds? Any idea why this would happen?

This is what we know so far

Pledged Stock Moving Out Of Pledge List

So we figured that CCIL has a trading volume criteria. Couldn’t find out what the exact number is. Here’s the broad methodology. One hack is to stick to some of the more liquid securities based on traded volume which you can check here https://www.ccilindia.com/OMMWCG.aspx We’re still trying to figure out exact methodology but CCIL doesn’t seem to have made it public.

[Saurabh_Makkar]

Thanks for sharing @Bhuvan

This CC decision/logic negatively impacts my long term plans now… Markets make us learn something new everyday

[smakkar]

The email from Zerodha also stated this Unpledging would happen on 31st May… So is it safe to assume these kind of updates will always happen at month end even if your team gets the update from Clearing Corporation few days or weeks earlier in that month?

Basically want to know if these unpledges can also happen randomly mid month or is there a cycle to when you get the updates and when you implement them?

[Bhuvan]

@smakkar

The email from Zerodha also stated this Unpledging would happen on 31st May… So is it safe to assume these kind of updates will always happen at month end even if your team gets the update from Clearing Corporation few days or weeks earlier in that month?

Yep, the list of eligible securities are updated once a month.

@smakkar

Basically want to know if these unpledges can also happen randomly mid month or is there a cycle to when you get the updates and when you implement them?

I don’t think this can happen mid month unless something dramatic happens like Yes Bank, but this is rare in bonds.

[TradeB2B]

@Saurabh_Makkar

Markets make us learn something new everyday

i am learning every one hour

[iamitp]

Are G Secs a good ‘trading’ bet for an interest rate cut outlook for the next 12-18 months.

Would the gains from the increased price (LTCG if post 12 months) + semi-annual interest payments (assuming for 1 year) make this an effective strategy?

[TradeB2B]

@iamitp yes i buy SBI Gsec Fund Heavily

[iamitp]

But why the fund, and not the Bond directly?

[TradeB2B]

Direct bond have not enough liquidity - price movement are not accurate - you cannot entry and exit at correct price
only GSEC fund can deliver accurate ,
AMC platform is different

[iamitp]

@iamitp

Are G Secs a good ‘trading’ bet for an interest rate cut outlook for the next 12-18 months.

Would the gains from the increased price (LTCG if post 12 months) + semi-annual interest payments (assuming for 1 year) make this an effective strategy?

Correct, but now you do lose more to taxation. Funds will be taxed at slab rate while LTCG Bonds at 12.5%

[Akash_Shah]

In general agree with all the points.
But Gsec, especially 10 years one are fairly liquid and buying selling them will not be an issue.

Couple them with tax arbitrage, on Gsec fund you would pay slab rate, whereas direct Gsec will only attract 12.5% LTCG, busing Gsec directly would be more beneficial, if you are hoping to gain from interest rate fall in next 12-18 months.