How To Trade Debt Instrument?
Debt Instrument market is very huge market. It is the larger market than the stock market. First of all let is understand what it means by Debt Instrument?
A debt instrument is any type of documented financial obligation that describes a debt that is assumed by the issuer of the document. Here are the types of Debt Instruments.
- Commercial papers
- Treasury Bills
- Certificate of Deposit...etc...
Debt instruments are a way for markets and participants to easily transfer the ownership of debt obligations from one party to another. Debt obligation transferability increases liquidity and gives creditors a means of trading debt obligations on the market. Without debt instruments acting as a means to facilitate trading.
Recently the Government of India has started the Interest rate futures. However, Road to Vibrant Debt Market is not easy. In Countries like India a retail investor can not trade in the Debt Instruments. Only the Institutional Investors like Mutual Funds, Large Corporations and Insurance Companies can trade in the debt instruments.
However, in the developed markets like USA, it is really easy to trade Debt Instrument. Because of the highly liquid US Debt market, it is really easy to trade in the debt instruments. Many Real Estate Investors in USA trade in the mortgages and make lots of money.
However, India is in the Nascent stage of Debt instrument Trading...!!!