The Central Bank will start issuing its maiden batch government treasuries in scripless form this week, allowing the market to settle their transactions electronically.
The first issue of Rs. 6.890 bn worth of treasuries came out of Wednesday auction, but will be issued to the market on Friday, with secondary market transactions slated for next Tuesday.
rnBut the Scripless Settlement System (SSS) and depository for government debt will come alive on February 13, Central Banks Superintendent of Public Debt, Dharma Dheerasinghe told Lanka Business Online. rn
rnSSS allows the banking community to conduct settle gilt-edge securities transactions electronically, reducing risk and costs, and introducing greater levels of security and visibility. rn
rnWhile eliminating the present paper-based transactions of gilt-edge securities, Scripless Settlement will also have a limited presence in the secondary market by aggregating customer accounts with the primary dealers. rn
rnThe Registered Stock and Securities Ordinance which was originally scheduled to have been changed in time for scripless trading to start in on September 08, failed to receive cabinet approval in time.rn
rnThe Central Bank became the first in the South Asian region, to have its inter-bank payment and settlement system go live last September. rn
rnThe Rs. 900 mn Real Time Gross Settlement system comes with a depository and settlement system for scripless trading, but it does not actually have an integrated front-end trading interface, or a communications backbone.
rnBut scripless trading on government bonds could not join the inaugural party, as Cabinet had not amended the laws by that time. rn
rnThe second phase will see the Central Bank link up with the stock exchanges depository and settle foreign exchange transactions real time. rn
rnMeanwhile, three-month treasury bill rates perked up marginally at this weeks auction. rn
rnThe bank offered and accepted bids for Rs. 6.890 bn, though it received bids for 17.
630 bn. rn
rnThe weighted average yield for three month paper rose two basis points to 7.45 percent..rn
rnRates for six months paper remained flat at 7.61 percent.rn
rnBut one-year yields fell one-basis point to 7.59 percent.rn
-LBO Newsdesk: LBOEmail@vanguardlanka.comrn