Skip to main content

When Issued Market and Short Sale of G-Sec

'When Issued’ market facilitate purchase / sale of securities even before they are issued and 'Short Sale' option allows sale of a security one does not own.

What is ‘When Issued’ market?

"When, as and if issued" security refers to a security that has been authorized for issuance but not yet actually issued. 

‘When Issued’ trading takes place between the time a Government Security is announced for issuance and the time it is actually issued. All 'When Issued' transactions are on an 'if' basis, to be settled if and when the actual security is issued. 

Which securities are eligible for ‘When Issued’ market?

Both new and reissued Government securities issued by the Central Government are eligible for ‘When Issued’ transactions. Eligibility of an issue for ‘When Issue’ trades is indicated in the respective specific auction notification. 

Who can participate in ‘When Issued’ market?

Participants eligible to undertake net long and short position in ‘When Issued’ market are –

  • All entities which are eligible to participate in the primary auction of Central Government securities are eligible to undertake both net long and short position in ‘When Issued’ market.
  • Resident individuals, Hindu Undivided Families (HUF), Non-Resident Indians (NRI) and Overseas Citizens of India (OCI) are eligible to undertake only long position in ‘When Issued’ securities. 

Entities other than scheduled commercial banks and Primary Dealers (PDs), need to close their short positions, if any, by the close of trading on the date of auction of the underlying Central Government security.

What are the limits for trading in ‘When Issued’ market?

The open position limits in the ‘When Issued’ market are as below –

Categories Limits on Long position Limits on Short position
PDs and scheduled commercial banks Not exceeding 25% of the notified amount in the auction Not exceeding 25% of the notified amount in the auction
Other eligible entities Not exceeding 25% of the notified amount in the auction Not exceeding 10% of the notified amount in the auction (Individuals, HUFs, NRIs and OCIs are not allowed to take short positions in the ‘When Issued’ market)

How are transactions carried out in ‘When Issued’ market?

  • ‘When Issued’ transactions commence after the issue of a security is notified by the Central Government and it cease at the close of trading on the date of auction. 
  • All ‘When Issued’ transactions for all trade dates shall be contracted for settlement on the date of issue. 
  • ‘When Issued’ transactions shall be undertaken only on the Negotiated Dealing System-Order Matching (NDS-OM) platform. However, an existing position in a ‘When Issued’ security may be closed either on the NDS-OM platform or outside the NDS-OM platform, i.e., through Over-the-Counter (OTC) market. All OTC ‘When Issued’ transactions shall be reported to NDS-OM within 15 minutes of the trade.

What is ‘Short Sale’?

‘Short sale’ means sale of a security one does not own. 

Banks may treat sale of a security held in the investment portfolio as a short sale. These transactions shall be referred to as ‘notional’ short sales. 

Which entities are eligible to undertake short sales?

Entities eligible to undertake short sales are –

  • Scheduled commercial banks
  • Primary Dealers
  • Urban Cooperative Banks 
  • Any other regulated entity which has the approval of the concerned regulator [Securities and Exchange Board of India (SEBI), Insurance Regulatory and Development Authority (IRDA), Pension Fund Regulatory and Development Authority (PFRDA), National Bank for Agriculture and Rural Development (NABARD) and National Housing Bank (NHB)]. 

What are the limits for short sale of securities?

The maximum amount of a security (face value) that can be short sold is –

Category Limits
Liquid securities 2% of the total outstanding stock of each security, or, ₹500 crore, whichever is higher.
Other securities 1% of the total outstanding stock of each security, or, ₹250 crore, whichever is higher.

‘Liquid security’ means a security identified and published by Fixed Income Money Market and Derivatives Association of India (FIMMDA) / Financial Benchmarks India Limited (FBIL) as a ‘liquid security’ for the purpose of short sale transactions.

‘Other security’ means a security other than liquid security and eligible for short sale transactions.

How are short sale transactions settled?

  • Short sales shall be covered within 3 months from the date of transaction (inclusive of the date). 
  • Short sales, including notional short sales by banks, shall be covered by outright purchase of an equivalent amount (face value) of the same security, either in the secondary market or in primary auction, including in the ‘When Issued’ market.
  • Securities that are short sold are to be invariably delivered on the settlement date. Entities shall meet their delivery obligations by borrowing securities in the repo market or through outright purchase. However, securities acquired under Reserve Bank of India’s (RBI’s) Liquidity Adjustment Facility or any other liquidity facility shall not be used for delivery into short sales.
  • Banks undertaking ‘notional’ short sales shall ordinarily borrow securities from the repo market to meet delivery obligations, but in exceptional situations of market stress (e.g., short squeeze), it may deliver securities from its own investment portfolio.
  • The short sale position executed in the OTC market should be reported on the NDS-OM platform within 15 minutes of the execution of the trade.


References

Reserve Bank of India. (2018, July 25). 'Secondary Market Transactions in Government Securities – Short Selling'. Retrieved from https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=11346&Mode=0

Reserve Bank of India. (2018, July 28). 'Transactions in the ‘When Issued’ (WI) market in Central Government Securities'. Retrieved from https://rbi.org.in/scripts/BS_CircularIndexDisplay.aspx?Id=11344

Reserve Bank of India. (2020, April 01). 'Government Securities Market in India – A Primer'. Retrieved from https://www.rbi.org.in/Scripts/FAQView.aspx?Id=79


Follow at - Telegram   Instagram   LinkedIn   Twitter   Facebook

Labels:

Comments

Post a Comment

Popular Posts

Modified Interest Subvention Scheme for Agricultural Loans

Reserve Bank of India (RBI) has published the modified interest subvention scheme (MISS) for short term loans for agriculture and allied activities availed through Kisan Credit Card (KCC) during the financial year 2025-26. Which loans are covered under modified interest subvention scheme (MISS)? The short-term crop loans and short-term loans for allied activities including animal husbandry, dairy, fisheries, bee keeping etc. up to an overall limit of ₹3 lakh to farmers through KCC during the year 2025-26 will be covered for interest subvention. Which lending institutions are covered under MISS? The MISS is applicable to the lending institutions viz. Public Sector Banks (PSBs) and Private Sector Banks (in respect of loans given by their rural and semi-urban branches only), Small Finance Banks (SFBs) and computerized Primary Agriculture Cooperative Societies (PACS) ceded with Scheduled Commercial Banks (SCBs), on use of their own resources.  How much is the interest subvention? The a...
Post a Comment
Read more

Digital Payments Awareness Week 2026

Reserve Bank of India (RBI) is observing digital payments awareness week from March 09 to 15, 2026. Digital Payments Awareness Week (DPAW) Digital Payments Awareness Week (DPAW) is an initiative to highlight the impact and importance of digital payments and to create awareness about safe usage of digital payment products.  Digital Payments Awareness Week (DPAW) 2026 Reserve Bank of India (RBI) is observing DPAW 2026 from March 09 to 15, 2026.  Under the mission ‘Har Payment Digital’, the theme for the current year is ‘Thoda Dhyan Se’ (be alert/ be careful). The theme emphasises the safe use of digital payments. ‘Har Payment Digital’ mission RBI had launched the mission ‘Har Payment Digital’ on the occasion of the DPAW 2023. This is part of RBI’s endeavour to make every person in India a user of digital payments. Previous Digital Payments Awareness Weeks (DPAWs) Year Theme 2025 ‘India Pays Digitally’ under the mission ‘Har Payment Digital’ ...
Post a Comment
Read more

Export and Import of Goods and Services

Reserve Bank of India (RBI) has issued regulations on export and import of goods and services. What are the regulations for declaration of exports? An exporter of goods shall furnish to the specified authority, a declaration in the Export Declaration Form (EDF) specifying the amount representing the full export value of goods, at the time of export. EDF will be deemed to be submitted as part of shipping bill for goods exported through Electronic Data Interchange (EDI) port. An exporter of services shall furnish to the specified authority, a declaration in EDF specifying the amount representing the full export value of services, within 30 days from the end of month in which invoice for services has been raised. The exporter of services who has exported services to one or more recipients in a month, may submit a single EDF for all such exports. The exporter of services other than software, may submit an EDF on or before the date of receipt of payment. In the case of a non-EDI port for ex...
Post a Comment
Read more

FEMA - Regulations on Guarantees

Reserve Bank of India (RBI) had issued regulations governing guarantees under the Foreign Exchange Management Act, 1999 (FEMA). What is a guarantee? A guarantee, including a counter-guarantee, means a contract, by whatever name called, to perform the promise, or discharge a debt, obligation or other liability (including a portfolio of debts, obligations or other liabilities), in the event of default by the principal debtor. Who are the participants in a guarantee transaction? Principal debtor – a person in respect of whose default the guarantee is given. Surety – a person who gives a guarantee. Creditor – a person to whom the guarantee is given. When can a person resident in India act as surety / principal debtor? A person resident in India may act as a surety / principal debtor for a guarantee, subject to conditions that – The underlying transaction for which the guarantee is being given or arranged is not prohibited under FEMA guidelines. The surety and the principal debtor are eligi...
Post a Comment
Read more

Priority Sector Lending (PSL) guidelines (updated as on January 19, 2026)

Reserve Bank of India (RBI) has issued the revised guidelines on Priority Sector Lending (PSL) which has come into effect from April 01, 2025.  To whom does Priority Sector Lending (PSL) guidelines apply? Priority Sector Lending (PSL) guidelines apply to – Commercial Bank [including Regional Rural Bank (RRB), Small Finance Bank (SFB), Local Area Bank (LAB)] Primary (Urban) Co-operative Bank (UCB) other than Salary Earners’ Bank  What are the categories under PSL? The categories under priority sector are as follows – Agriculture Micro, Small and Medium Enterprises Export Credit Education Housing Social Infrastructure Renewable Energy Others What are the PSL targets for banks? The targets and sub-targets set under PSL, to be computed on the basis of the Adjusted Net Bank Credit (ANBC) / Credit Equivalent of Off-Balance Sheet Exposures (CEOBSE) as applicable as on the corresponding date of the preceding year are as below – Categories Total Priority Sector ...
Post a Comment
Read more