Wholesale Debt Market Segment :
The WDM segment provides the only formal trading platform for trading of a wide range of debt securities. Initially, government securities, treasury bills and bonds issued by public sector undertakings (PSUs) were made available for trading. This range has been widened to include non-traditional instruments like floating rate bonds, zero coupon bonds, index bonds, commercial papers, certificates of deposit, corporate debentures, state government loans, SLR and non-SLR bonds issued by financial institutions, units of mutual funds and securitised debt.
The WDM trading system, known as NEAT (National Exchange for Automated Trading), is a fully automated screen based trading system that enables members across the country to trade simultaneously with enormous ease and efficiency. The trading system is an order driven system, which matches best buy and sell orders on a price/time priority.
Trading system provides two market sub-types: continous market and negotiated market. In continuous market, the buyer and seller do not know each other and they put their best buy/sell orders, which are stored in order book with price/time priority. If orders match, it results into a trade. The trades in WDM segment are settled directly between the participants, who take an exposure to the settlement risk attached to any unknown counter-party. In the NEAT-WDM system, all participants can set up their counter-party exposure limits against all probable counter parties. This enables the trading member/participant to reduce/minimise the counter- party risk associated with the counter- party to trade. A trade does not take place if both the buy/sell participants do not invoke the counter-party exposure limit in the trading system.
In the negotiated market, the trades are normally decided by the seller and the buyer, and reported to the Exchange through the broker. Thus deals negotiated or structured outside the exchange are disclosed to the market through NEAT-WDM system. In negotiated market, as buyers and sellers know each other and have agreed to trade, no counter-party exposure limit needs to be invoked.
The trades on the WDM segment could be either outright trades or repo transactions with flexibility for varying days of settlement (T+0 to T+2) and repo periods (1 to 14 days). For every trade, it is necessary to specify the number of settlement days and the trade type (repo or non-repo) and in the event of a repo trade, the repo term.
The Futures and Option trading system, called NEAT-F&O trading system, provides a fully automated screenbased trading for S&P CNX Nifty futures on a nationwide basis and an online monitoring and surveillance mechanism. It supports an order driven market and provides complete transparency of trading operations. It is similar to that of trading of equities in the CM segment.
The NEAT-F&O trading system is accessed by two types of users. The Trading Member (TM) has access to functions such as, order entry, order matching, order and trade management. The Clearing Member (CM) uses the trader workstation for the purpose of monitoring the trading member(s) for whom he clears the trades. Additionally, he can enter and set limits to position, which a trading member can take.