8 May 2013
Closure of RBA Small Investor Bond Facility
On 21 May 2013 the quotation and trading of Exchange-traded Australian Government Bonds (AGBs) will commence on the Australian Securities Exchange (ASX). This offers a means for retail investors to invest in AGBs in the form of CHESS Depositary Interests (CDIs).
- The holder of Exchange-traded AGBs has beneficial ownership of AGBs in the form of CDIs. All of the economic benefits including coupon and principal payments, attached to legal ownership of the bonds will come with ownership of these CDIs.
- Exchange-traded AGBs are electronically traded and settled through the ASX and can be traded in small or large parcels. Exchange-traded AGBs can be traded on the ASX in the same way as listed shares.
- Both Treasury Bonds and Treasury Indexed Bonds are available as Exchange-traded AGBs.
- Investors should contact their financial adviser or broker to buy or sell Exchange-traded AGBs.
The small investor bond facility operated by the Reserve Bank of Australia (RBA) was established to provide retail investors with a means to directly invest in AGBs. The RBA facility is not considered necessary once retail investors can invest in AGBs via Exchange-traded AGBs.
- From 21 May 2013 it will no longer be possible for investors to purchase AGBs through the RBA facility.
- It will still be possible for existing investors to sell their holdings of AGBs through the RBA facility until further notice.
More information about Exchange-traded AGBs is available on the following websites.
A facility is being developed to allow existing inscribed stock investors of Treasury Bonds and Treasury Indexed Bonds to convert their holdings respectively into Exchange-traded Treasury Bonds and Exchange-traded Treasury Indexed Bonds.
- 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 Exchange-traded AGBs if they wish.