Most clients set up to trade in Indian bonds before index inclusion: JP Morgan

Ahead of India’s June 28 inclusion in the GBI-EM Global Index Suite, how have operational metrics evolved in the country’s bond markets? Are global clients prepared for the process?
Gloria Kim: Based on the annual Index Governance Consultation process, market feedback so far has been largely positive. Majority of our clients already have their accounts set-up to trade in the IGB market. Moreover, we see positive market momentum as there are now several India-focused Bond ETFs and UCITs funds offering intra-day liquidity. As always, there are still teething issues when entering a new market, however we have found these to be related to mostly operational readiness and flexibility of counterparties and custodians rather than barriers to entry.

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Offering CollegeCourseWebsiteIndian School of BusinessISB Chief Digital OfficerVisitIIM LucknowChief Executive Officer ProgrammeVisitIIM LucknowChief Operations Officer ProgrammeVisitWhat were the key considerations that prompted JP Morgan to make the decision after years of talks with Indian authorities?
Gloria Kim: The introduction of the Fully Accessible Route (FAR) bonds by the RBI in 2020 made it possible for the FPIs to invest in Indian government bonds (IGBs) with less constraints, paving the way to review India’s inclusion into the GBI-EM Global Diversified index. GBI-EM Global Diversified index is the mostly widely used benchmark within the GBI-EM family, following the index pillars of Accessibility, Liquidity, Replicability and Transparency and appealing to an international investor base. As it was announced after 3 years of being on the Index Watch for index eligibility review, India is on track for inclusion in terms of scope and timeline. India-FAR bonds are eligible for the GBI-EM indices following a 10-month phased inclusion period starting June 28, 2024.