RBI asks market participants to utilise price-range setting in G-Sec auctions to avoid fat-finger errors

The Reserve Bank of India (RBI) has advised all market participants to utilise the ‘Price/ Yield range setting’ facility provided on the e-Kuber platform before placing bids in the primary market auctions of government securities (G-Secs.)
The move comes after few instances of ‘fat-finger errors’ by bidders.

As there have been a few instances of fat-finger/big-figure error by the bidders in the G-Sec auctions conducted by Reserve Bank, the regulator suggests that some of the market participants are yet to put in place the ‘Price/Yield range setting’ facility in their system,” the RBI said in a circular.

“It may be noted that no request for cancellation of bids will be entertained after close of auction window,” the circular added. 

In December 2019 the ‘Price/Yield range setting’ facility was provided on the e-Kuber platform as a risk management measure.

The facility allows a market participant to define a range i.e., a maximum and a minimum value for bids they intend to submit in an auction.

The range can be set in either price or yield terms, for each security in every auction, which can be set before the auction and can also be modified during the auction.

Once the limits are set by the participating entity, the bids in the auction are automatically validated against the set limits. This is expected to eliminate instances of ‘fat-finger/big-figure’ error by the bidders in the G-Sec auctions.