homemarket NewsBharat Bond ETF will benefit brokerages and fuel bond market growth, says Edelweiss’ Rashesh Shah
Bharat Bond ETF will benefit brokerages and fuel bond market growth, says Edelweiss’ Rashesh Shah
Bharat Bond exchange traded fund (ETF) debuts on the exchanges today. The fund is managed by Edelweiss Asset Management Company and the issue was oversubscribed 1.7 time and garnered Rs 12,000 crore. Yash Jain spoke to Rashesh Shah, chairman of Edelweiss Group from the sidelines of the listing ceremony.
As Bharat Bond Exchange Traded Fund (ETF) debuts on the exchanges today, Rashesh Shah, chairman of Edelweiss Group, whose Asset Management Company manages the product, said it will ratchet up competition among market makers such as brokerages.
Brokers have a lot of retail clients who have surplus liquidity and want to invest in fixed income, he said. “So by market making, they will be providing a product as a service to their clients and can charge broker rates to their clients and earn brokerage on that,” he said on the sidelines of the listing ceremony on Thursday.
The Bharat Bond ETF, which allows retail investors to buy government debt thereby helping PSU coffers, was oversubscribed 1.7 times and collected Rs 12,000 crore.
Shah said because the ETF is AAA rated and is focussed on PSUs, the market makers will be happy to hold inventory. “Also, the market makers will also have access to the repo market on the spread. So their own capital will not be blocked,” he said.
In a way, that means they will be able to make much more efficient pricing, according to him. “These are public sector enterprises, so there is always a government backstop on all this and that is why even today PSUs which are AAA rated are highly regarded in the market. So in a way, investor is getting access to them,” he said.
Though the involvement of the government and the PSU PSUs element gives investors a high degree of comfort and safety, the launch of Bharat Bond ETF signals maturity in the market, said Shah, a veteran of the Indian financial markets. “I do believe there is a lot more rigour that is going in now and there is a lot more analysis that is going in now.”
The launch of the ETF bodes well for the Indian financial markets because India is at an important inflection point where it is vital t get a credit market and bond market stabilise and started again, he said. “Retail investors coming to bond market will change the game, efficiency will come up and the growth we have seen in equity markets over the last 25 years will been seen in the bond market for the next 10 years,” he said.
First Published: Jan 2, 2020 1:14 PM IST
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