My first job in financial markets was as a government bond trader for an investment bank – in fact, I spent almost a decade and lost quite a bit of hair doing this – so you may be a little surprised to hear that I am not getting too excited about the launch of government bond trading on the ASX.
While it will make it easier for SMSFs and others to invest in government bonds, it is not new. Contrary to the many misinformed commentators, small investors have always been able to invest in government treasury bonds – the Reserve Bank has offered a small bond facility for more than 25 years! This old service will now be closed to new purchases.
Let’s start with the new service. From Tuesday 21 May, investors will be able to buy or sell on the ASX, Australian Government Exchange-Traded Treasury Bonds (or eTBs) and Exchange-Traded Treasury Indexed Bonds (or eTIBs). These bonds will trade on the ASX like other hybrid or income securities and have a face value of $100.