Nomura on Friday received a licence from the banking regulator, the Reserve Bank of India, to operate a primary dealership in India. The Reserve Bank has granted the license to a Nomura subsidiary, Nomura Fixed Income Securities (NFIS). NFIS will start operating as a primary dealer effective today.
Broadly, the licence permits Nomura to underwrite primary issues of government securities, provide broking services and deal in government securities. Primary dealership has been a large revenue-earner for both local and international investment banks operating in India. Other foreign banks that are active primary dealers in India include J.P. Morgan and Deutsche Bank. Most recently, Morgan Stanley received its primary dealership licence in July.
Nomura said in a written statement that NFIS will be able to "access and trade Indian interest rate risk via underwriting and distributing [of] government bonds as well as trading in local currency interest rate swaps". The Tokyo-based investment bank added that the recent launch in India of interest rate futures contracts as well as the awaited introduction of a Strips (separate trading of registered interest and principal securities) market would enable it to offer a comprehensive suite of products to clients. "This will complement Nomura's expertise and lead role in trading these sets of products in other markets in Asia, including Japan and Korea," the bank added.
"This important milestone in the build-out of Nomura's Indian operations adds significant fixed-income activities to our burgeoning franchises in equities, investment banking, and asset management," Vikas Sharma, president and chief executive officer of Nomura India, said in the statement.
Nomura's equities and fixed-income businesses in India are headed by Pankaj Vaish. Vaish described India's fixed-income market as the second-largest in Asia after Japan and added that the primary dealership in India affirmed Nomura's commitment to be a leading player in the capital markets in Asia ex-Japan.