The Securities and Exchange Board of India (SEBI) has issued a circular facilitating SEBI-registered stock brokers’ access to the Negotiated Dealing System-Order Matching (NDS-OM) platform for trading in Government Securities (G-Secs). This follows the Reserve Bank of India’s (RBI) Master Direction – Reserve Bank of India (Access Criteria for NDS-OM) Directions, 2025, which permits non-bank brokers to participate in the G-Sec market through NDS-OM.
To ensure regulatory clarity and risk management, SEBI mandates that stock brokers conduct NDS-OM transactions under a Separate Business Unit (SBU) within their existing entity. The SBU must be ring-fenced from the stock broker’s traditional securities market activities, maintaining an arms-length relationship between the two. Additionally, the SBU must exclusively transact in NDS-OM and maintain separate accounts to ensure financial segregation. The net worth of the SBU must also be distinct from the broker’s net worth in the securities market, ensuring compliance with financial requirements.
Since NDS-OM activities fall under RBI’s jurisdiction, investors availing services through the SBU will not have access to SEBI’s Grievance Redressal Mechanism, Investor Protection Fund (IPF), or SCORES (SEBI’s complaint resolution system). This reinforces the distinction between securities market activities and government securities trading.
The SEBI circular provides a structured framework to regulate stock brokers’ participation in the G-Sec market while ensuring investor protection and risk mitigation. The move aims to deepen market participation, enhance liquidity, and promote transparency in fixed-income securities trading. The circular is issued under Section 11(1) of the SEBI Act, 1992, in conjunction with Regulation 30 of SEBI (Stock Brokers) Regulations, 1992, reinforcing SEBI’s commitment to fostering market development and safeguarding investors.
Stock brokers seeking NDS-OM access must comply with SEBI’s framework and ensure strict adherence to the ring-fencing requirements. The circular is available on SEBI’s official website, and further clarifications can be sought from SEBI’s General Manager, Ms. Aradhana Verma.
This initiative marks a significant step in integrating SEBI-registered brokers into the government securities market, encouraging broader participation while maintaining strong regulatory oversight.
