Self-managed super fund trustees are set to benefit from the government’s pledge to allow retail investors to trade government bonds on the Australian Securities Exchange.
Federal Treasurer Wayne Swan announced the move Tuesday amid talks to create greater liquidity and support for the corporate bond market, which plays second fiddle to equities in the portfolios of most retail investors. He said the introduction of Government bonds to the ASX will provide investors interested in corporate bonds with improved access to a price benchmark.
While talks to determine the best road forward for corporate bonds continue, the Government’s announcement that Government debt will be able to be bought and traded on the ASX will improve the ease of access to fixed-interest products for retail investors at a time when there has been much volatility in equity markets.
“As part of our aim to foster a deep and liquid corporate bond market, the Government has also committed to allowing retail investors to buy and trade Commonwealth Government Securities (CGS) on a retail platform, in a similar way they already trade equities,” Mr Swan said in a statement Tuesday.
“This will 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.”
He said discussions with potential market operators indicate that an ‘indirect’ or ‘beneficial ownership’ type of trading model would be the most efficient, cost-effective and timely method for facilitating retail CGS trading.
