Pure millioneare(PM) wrote:I am selling a treasury bond in the secondary market.
For this I have to go through my broker who will source a buyer and agree on a price.
This looks abit kienyenji like batter trading unlike shares where trading is more automated.
Are there loopholes in this process? How is the settlement done after the bond is successfully sold?
Its DvP once the bond changes ownership...CBK will debit the account of the buyer and credit the account of the seller.
The process is basically this,
(1) You have gotten a bid on your offer...
(2) You fill the green CBK sale order forms + a cover letter for onward transmission to CBK.
(3) CBK calls you and asks about the specifics of the bond...
(4) The CBK guys avail the bond for the transaction...your broker trades it via Avento...He?She gets an order no (OPODSC) and ATS ID this are the 2 details needed for settlement.
(5) Buyers bond CDS account gets credited with the paper...while the bank account gets debited ...Sellers bank account gets credited with cash...bond CDS gets debited.
There is no loophole...
possunt quia posse videntur