Deputy Prime Minister Wayne Swan and Minister for Financial Services Bill Shorten today announce that Australian Government Bonds (AGBs) will be available for trading on the Australian Securities Exchange for the first time on 21 May.
This will enable retail investors to buy and sell AGBs in a similar way to how they buy and sell shares. The retail trading of AGBs will make it easier for mum and dad investors, including many self-managed super funds, to hold and trade Commonwealth-backed bonds.
The Australian Office of Financial Management (AOFM) has made technical and commercial arrangements with the ASX and the selected registry operator to support the start of trading. The AOFM has also prepared concise disclosure documentation for retail investors.
This is part of the Government's Competitive and Sustainable Banking System package to empower consumers to get a better deal, help smaller lenders put more competitive pressure on the big banks and strengthen the long-term safety and sustainability of our financial system.
Through enabling the further development of the AGB market, retail investors will have the opportunity to diversify their savings. Greater engagement by investors will also, over time, encourage companies to diversify their funding sources and offer opportunities for retail investor participation.
As the market develops, buying and selling AGBs and corporate bonds may become as straightforward as purchasing shares is today.
The commencement of trading AGBs follows the introduction earlier this year of legislation creating a simple corporate bond regime to further encourage the retail trade of corporate bonds.
A more vibrant retail corporate bond market will provide Australian business with an alternative funding option, adding competitive pressure in the business lending market.
More information can be found at the Australian Government Bonds website.