RBI Issues Circular in Regard to the Operational Risk Management: Price/Yield Range Setting in e-Kuber

On 11th January 2023, the Reserve Bank of India (RBI) issued a Circular in regard to the Operational Risk Management: Price/Yield Range Setting in e-Kuber. This particular circular was issued in reference to Circular No. IDMD/1615/08.02.032/2019-20 issued on 12th December 2019, advising the participants in the Government Securities (G-Sec) Market in regard to the “Price /Yield Range Setting” facility 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 participating entity sets the limits, the bids in the auction are automatically validated against the set limits. This is expected to eliminate Fat-finger/Big-figure error instances by the bidders in the G-Sec auctions.