Informist, Thursday, May 16, 2024
--PNB Gilts MD Goel: Aim to launch proprietary FX operations by Jul 1
-- PNB Gilts' Goel: FX ops launch delayed due to infrastructure issues
By Aaryan Khanna
NEW DELHI - PNB Gilts plans to launch its proprietary foreign exchange business by Jul 1 after a delay due to infrastructure issues, Managing Director and Chief Executive Officer Vikas Goel said. "I just got visibility on it. All the human resources and trading mechanisms are in place," Goel told Informist on Wednesday. "It is just that settlement infrastructure, which we thought would be the easiest part, has proven to be challenging."
The issues, which sprung up unexpectedly and delayed the launch by a few months, are likely to be sorted out by the end of the quarter, the bond market veteran of over three decades said. The primary dealership had planned to launch these operations by the end of 2023-24 (Apr-Mar), Goel had earlier said.
PNB Gilts, the only listed standalone primary dealer in India, had said in an exchange filing in July that it had received the Reserve Bank of India's authorisation to offer forex services on par with Authorised Dealer Category-I entities.
"For us, it is going to be mostly a proprietary business at launch. Obviously, we will not let go of any opportunity to grab foreign portfolio investors either," the managing director said.
In October 2022, the RBI had allowed standalone primary dealers to offer all foreign exchange market-making facilities on par with Authorised Dealer Category-I entities, and issued norms for the same. Currently, no standalone primary dealer offers the expanded forex operations.
Primary dealers are non-banking financial companies and have Authorised Dealer Category-III licences from the RBI. They are market-makers in the fixed income market, for both government securities and corporate bonds. Their primary activity is gaining interest income on held securities and capital gains from trading fixed income and money market instruments, along with some fee income for underwriting auctions of government paper. In India, there are seven standalone primary dealers, along with 14 integrated primary dealers.
PNB Gilts, the Delhi-based standalone primary dealer, saw its net profit nearly quadruple on year to 861.3 mln rupees in Jan-Mar, according to the results declared earlier this month. The largest chunk of PNB Gilts' revenue comes from interest income, and its bumper results were helped by a net gain of 555.2 mln rupees on securities in the quarter ended March.
Following the earnings, in an interview with Business Today, Goel had said the forex operations would not be a core business, and account for just 5-10% of the firm's bottomline even at maturity.
If the revised timeline is met, PNB Gilts will be able to launch forex operations around the time when India's government bonds are included in global bond indices, which will lead to an influx of foreign investments in the debt market. Already, FPIs have bought around $8 bln of index-eligible gilts since JP Morgan announced the inclusion on Sep 21.
India's fully accessible route bonds will be added to JP Morgan's Government Bond Index – Emerging Markets in a phased manner starting Jun 28, over a 10-month period. Bloomberg's local currency emerging market index will also include Indian gilts starting Jan 31, over a 10-month timeframe as well. These bond index inclusions are projected to bring in FPI inflows of around $30 bln into gilts from passive investors alone, bond dealers said.
At 1329 IST, shares of PNB Gilts were down nearly 1% at 102.50 rupees on the National Stock Exchange. End
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Informist, Thursday, May 16, 2024
--PNB Gilts MD Goel: Aim to launch proprietary FX operations by Jul 1
-- PNB Gilts' Goel: FX ops launch delayed due to infrastructure issues
By Aaryan Khanna
NEW DELHI - PNB Gilts plans to launch its proprietary foreign exchange business by Jul 1 after a delay due to infrastructure issues, Managing Director and Chief Executive Officer Vikas Goel said. "I just got visibility on it. All the human resources and trading mechanisms are in place," Goel told Informist on Wednesday. "It is just that settlement infrastructure, which we thought would be the easiest part, has proven to be challenging."
The issues, which sprung up unexpectedly and delayed the launch by a few months, are likely to be sorted out by the end of the quarter, the bond market veteran of over three decades said. The primary dealership had planned to launch these operations by the end of 2023-24 (Apr-Mar), Goel had earlier said.
PNB Gilts, the only listed standalone primary dealer in India, had said in an exchange filing in July that it had received the Reserve Bank of India's authorisation to offer forex services on par with Authorised Dealer Category-I entities.
"For us, it is going to be mostly a proprietary business at launch. Obviously, we will not let go of any opportunity to grab foreign portfolio investors either," the managing director said.
In October 2022, the RBI had allowed standalone primary dealers to offer all foreign exchange market-making facilities on par with Authorised Dealer Category-I entities, and issued norms for the same. Currently, no standalone primary dealer offers the expanded forex operations.
Primary dealers are non-banking financial companies and have Authorised Dealer Category-III licences from the RBI. They are market-makers in the fixed income market, for both government securities and corporate bonds. Their primary activity is gaining interest income on held securities and capital gains from trading fixed income and money market instruments, along with some fee income for underwriting auctions of government paper. In India, there are seven standalone primary dealers, along with 14 integrated primary dealers.
PNB Gilts, the Delhi-based standalone primary dealer, saw its net profit nearly quadruple on year to 861.3 mln rupees in Jan-Mar, according to the results declared earlier this month. The largest chunk of PNB Gilts' revenue comes from interest income, and its bumper results were helped by a net gain of 555.2 mln rupees on securities in the quarter ended March.
Following the earnings, in an interview with Business Today, Goel had said the forex operations would not be a core business, and account for just 5-10% of the firm's bottomline even at maturity.
If the revised timeline is met, PNB Gilts will be able to launch forex operations around the time when India's government bonds are included in global bond indices, which will lead to an influx of foreign investments in the debt market. Already, FPIs have bought around $8 bln of index-eligible gilts since JP Morgan announced the inclusion on Sep 21.
India's fully accessible route bonds will be added to JP Morgan's Government Bond Index – Emerging Markets in a phased manner starting Jun 28, over a 10-month period. Bloomberg's local currency emerging market index will also include Indian gilts starting Jan 31, over a 10-month timeframe as well. These bond index inclusions are projected to bring in FPI inflows of around $30 bln into gilts from passive investors alone, bond dealers said.
At 1329 IST, shares of PNB Gilts were down nearly 1% at 102.50 rupees on the National Stock Exchange. End
Informist Media Tel +91 (11) 4220-1000
Send comments to feedback@informistmedia.com
© Informist Media Pvt. Ltd. 2024. All rights reserved.