Sovereign Gold Bond is now tradable on nse except last tranche. There is enough volume in SGB Aug24 & Sep24. However I am not able to buy the same in Zerodha inspite having Demat account. When contacted customer care they are saying you cannot trade SGB. Then why it is listed on exchanges and if trading is happening daily, who is involved in trading. Kindly explain how I can buy SGB from nse.
How to buy Sovereign Gold Bonds (SGB)
Why zerodha not allowing to trade in sovereign gold in secondary market?
Whenever you buy shares on the secondary market, the shares are credited by the Exchange to the broker’s pool account. Every broker is required to have a pool account with NSDL and CDSL which are the 2 depositories.
As a client, you’d normally have an account with either NSDL/CDSL. If you’ve opened a demat account through Zerodha, your demat account is with CDSL. Assume you buy units of SGB, these units could get credited from the Exchange either in Zerodha’s NSDL pool account/CDSL pool account. If the units get credited in the CDSL pool account, the broker can transfer these units to your CDSL account.
But, if the units get credited to the broker’s NSDL pool account, the units cannot be transferred to your CDSL demat account. This is because RBI & the depositories today, don’t allow Inter Depositary transfers (NSDL to CDSL and vice versa) in any Government security. In light of such limitation, we aren’t allowing fresh purchase from the secondary markets. If you’ve received allotment of units when the issue was open, you can redeem them by placing a sell order.
The depositaries are in touch with RBI to allow Inter DP transfers to happen after which you will be able to buy and sell these Government securities just like equity shares.
How can I redeem premature Sovereign gold 2017-18
Thank you for your quick reply. Kindly intimate us if inter DP transactions are allowed thus zerodha allowed to trade in SGB. Also educate your customer care staff so as to pass correct information to customers.
This explanation is not logical.
The same problem should occur even when I buy shares of say Reliance…if they get credited to your NSDL pool account, what then?
Also, if I have an NSDL account too, in addition to a CDSL account, your problem is over…will you allow me to buy then?
Methinks there is more to this than meets the eye…
There is no restrictions on moving stocks between NSDL and CDSL. There is a restriction put on SGB by RBI. I am guessing not too long before it is removed.
You can only open a CDSL account with us, so there is no way we can deliver SGB to your demat if we receive it in our NSDL pool. But you are right, if we were members on both NSDL and CDSL and we allowed you to open both the demats and map to the trading account, we could have done this. But no broker currently allows this even if they are members on both the depositories
This issue is only for inter-depository transfer of Government Securities: Below is the latest circular from CDSL on this, as soon as depositories facilitate transfer of these securities your DP/TM should allow you to buy SGB.
Well, any progress? Many of us are eagerly waiting to buy these bonds off the secondary market at a deep discount! In fact today’s ToI investment page carries an article (reprinted from ET) about how good a bargain this is!!
So when will we retail traders get the benefit of being treated at par with the prop traders by the DPs and brokers?
from what i understand from the reply zerodha has a pool account with NSDL.
but when you onboard a new client , clients account get opened in CDSL
is that correct?
if that is correct. why cant zerodha open a pool account with CDSL for the benefit of all the customers who want to trade in government securities?
isnt that a more practical way to deal with the situation rather than waiting for someone else (CDSL and NSDL) to convince yet another someone else (SEBI, government) . since all the parties involved are government or quasi government entities rest assured this wont get resolved anytime in the next 1 or 2 years .
practically, i would rather look for another broker than wait for the government to resolve its issues!
Does these SGBs bought through Zerodha also have lock in period of 5 years like it is offered in banks?
Yes, the tenor of the bonds is 8 years but you will have the option to exit them from the 5th year.
As brokers, we’re required to have pool accounts in both depositories - NSDL & CDSL.
A client of Zerodha can have a demat account at NSDL/CDSL, that’s immaterial to the Exchanges. When a client buys stocks, the Exchange can credit these stocks to either the broker’s NSDL pool account or CDSL pool account. Presume, you’re a client who holds a CDSL demat account & bought SGB in the secondary markets. The Exchange may credit these units to our CDSL account or NSDL account. If the units of SGB are credited to our CDSL account, there would be no problem in transfering these units to your demat since the stocks are moving in the same depository. Now assume, instead of CDSL, the Exchange credits the units to our NSDL pool, then such units cannot be transferred to your CDSL account since inter-depository transfers currently aren’t allowed.
This isn’t specific to Zerodha but to all brokerages in the country.
Why is it that you have no say in deciding which pool account gets credited with securities?
continuing with the discussion , wanted to know if you had a way to choose which account gets credited with securities by NSE?
When will the issue would be resolved ? Since many brokers are allowing trading in SGB.
Any updates on when we could buy SGB in Zerodha?
- I’ve placed the order to buy SGB on Pi & the order gets rejected.
- I am aware of RBI restrictions for the inter-depository transfer in case of Government Securities & Zerodha does not belongs to NSDL A/c. If any particular Client provide you his / her NSDL beneficiary A/c details then you should enable him / her to trade in Government Securities (in secondary market) like Sovereign Gold Bonds.
- What is restricting you from doing so?
- Most of the renowned brokers have both NSDL & CDSL A/c then why Zerodha not opt for NSDL A/c since the client base is growing day by day?
Just checked and looks its still an issue.
There is currently no option to buy it from secondary market via Zerodha.
Any recent update on this?
We really wanted to buy the discounted units of SGB from market rather than buying fresh units at higher cost.
Any update on this issue ? It’s been more than a year now. I am still not able to purchase SGB through Kite.
I have some NCDs and Gold bonds in Kotak, but I couldn’t transfer it here because of this issue. now I am thinking whether I have to keep zerodha or move to some other broker who has depository account in nsdl and cdsl also
When will be SGB available to buy in secondary market? The rates are good to buy as the moment as compared the the primary market these days !
I want to buy from a Zerodha client to zerodha account i mean CDSL only is it posible using the kite platform ?