Central Bank taking bonds on-line

The Central Bank has gone on-line with its  electronic Government Securities Settlement (GSS) system. The new system will be used for treasury bills and treasury notes in the first instance, and will be expanded to include government bonds in the first quarter of 2005. The GSS system, which is part of the reform plan for the national payments system, is comprised of an on-line auction system and an integrated securities depository. The auction system allows the bank’s counterparties to bid for new government stock on line.

Allocation of securities will take place automatically at the close of the auction, the bank said. The auction system is linked to a depository for government securities and the recently introduced electronic Real Time Gross Settlement system, safe-tt. On settlement day, the system simultaneously records ownership of securities in the depository and debits funds from the relevant account at the Central Bank, thereby introducing “delivery versus payment” for the first time as a standard in the securities market. The new system conforms to international best practice and will bring benefits such as a reduction of transactions risk, more rapid (real time) settlement and improved record keeping, the Central Bank said.