Bloomberg Index Services defers Indian sovereign bonds inclusion due to issues

Why in news

Bloomberg Index Services (BISL) deferred the inclusion of Indian sovereign bonds in its Global Aggregate index due to operational and market-infrastructure hurdles.

Background

Bloomberg Index Services (BISL) cited lack of fully automated trading workflows, settlement/repatriation timelines for post-trade taxes, and complex fund registration as reasons for deferral. The Global Aggregate index tracks over $70 trillion in investment-grade bonds.

Facts for Prelims

• FactThe Global Aggregate index tracks more than $70 trillion worth of bonds.
• FactExpected inflows from inclusion were estimated between $10-15 billion.
• FactIndian bonds are currently part of three other major emerging-market indexes.
• FactBISL identified lack of fully automated trading workflows and complex fund registration as key barriers.

For Mains

Q. Analyze the significance of inclusion in global bond indices for India's capital markets and discuss the infrastructural reforms needed to attract long-duration foreign capital.

Dimensions to cover in your answer

• impact on yield curve
• foreign portfolio investment (FPI) flows
• infrastructure: automation and settlement
• market depth and liquidity

Keywords: sovereign bonds · capital markets · market infrastructure · yield curve · foreign capital inflow

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