8 May 2013
Launch of Exchange-Traded Australian Government Bonds Trading
From 21 May 2013 Exchange-traded Australian Government Bonds will be traded on the Australian Securities Exchange (ASX). This will provide investments in Treasury Bonds and Treasury Indexed Bonds in the form of CHESS Depositary Interests (CDIs). These are called Exchange-traded Treasury Bonds (eTBs) and Exchange-traded Treasury Indexed Bonds (eTIBs). All the economic benefits, including coupon and principal payments, attached to legal ownership of Treasury Bonds or Treasury Indexed Bonds will come with ownership of these CDIs.
Treasury Bonds and Treasury Indexed Bonds are not traded on an exchange and are typically traded in large parcels, putting them beyond the reach of many investors. eTBs and eTIBs will be electronically traded and settled through the ASX in small or large parcels, in the same manner as listed shares.
The Australian Government Bonds Website (www.australiangovernmentbonds.gov.au) was launched today. It contains information on the range of eTBs and eTIBs available for investment, and explains how they can be bought and sold.
The small investor bond facility operated by the Reserve Bank of Australia (RBA) was established to provide retail investors with a means to invest in Australian Government Bonds. The RBA facility is not considered necessary once retail investors can invest in Australian Government Bonds via eTBs and eTIBs.
- From 21 May 2013 it will no longer be possible to purchase Australian Government Bonds through the RBA facility.
- It will still be possible for existing investors to sell their holdings of Australian Government Bonds through the RBA facility until further notice.
A facility is being developed to allow existing inscribed stock investors of Treasury Bonds and Treasury Indexed Bonds to convert their holdings respectively into eTBs and eTIBs.
- The AOFM will provide written notification to investors of this service when the conversion facility is available.
- Until that time, existing investors may decide to sell their holdings of Treasury Bonds and Treasury Indexed Bonds to the RBA and reinvest in eTBs and eTIBs if they wish.
On 12 December 2010 the Australian Government announced a package of measures to promote a competitive and sustainable banking system. These measures included assisting the development of a deep and liquid corporate bond market. One way this can be achieved is by launching the trading of Australian Government bonds on a securities exchange.
This is expected to provide retail investors with a more visible pricing benchmark for investments they may wish to make in corporate bonds issued by Australian businesses, as well as help further encourage retail investors to consider diversifying their savings through investments in fixed income products like government and corporate bonds.