What is Bond trading?

Bond trading refers to the buying and selling of bonds in the financial markets. Bonds are fixed-income securities that represent a loan made by an investor to a borrower (which can be a government, municipality, corporation, or other entity). When investors buy bonds, they are essentially lending money to the bond issuer in exchange for periodic interest payments (coupon payments) and the return of the bond's face value (principal) at maturity. Bond trading can take place on Comfort Securities platforms, including bond exchanges, over-the-counter (OTC) markets, and electronic trading platforms.

Benefit of Investing in fixed-income & bonds

Sovereign Gold Bonds (SGBs):

Government-Backed Security

SGBs are issued by the Government of India, providing investors with the assurance of a sovereign-backed investment vehicle

Ownership of Gold

Investors gain exposure to the price movement of gold without the hassle of storing physical gold, as each unit of SGB represents a specific quantity of gold

Fixed Interest Income

SGBs offer a fixed rate of interest on the initial investment amount, providing investors with additional income in addition to potential capital appreciation.


SGBs are listed on stock exchanges, allowing investors to buy and sell them easily in the secondary market, enhancing liquidity compared to physical gold investments.

Tax Benefits

Investors can enjoy tax exemptions on capital gains upon redemption if held until maturity, along with indexation benefits for long-term gains, making SGBs tax-efficient investment options.

Listed Non-Convertible Debentures (NCDs)

Fixed Income Investment

NCDs offer investors a fixed rate of interest over a specified tenure, providing stable returns compared to equity investments

Diverse Options

Investors can choose from a variety of NCDs issued by different companies with varying interest rates, tenures, and credit ratings, allowing for diversification within fixed-income portfolios

Listed on Stock Exchanges

Listed NCDs are traded on stock exchanges, providing liquidity and enabling investors to buy and sell them easily, unlike traditional debentures

Credit Rating

NCDs are assigned credit ratings by rating agencies, indicating the issuer's creditworthiness and helping investors assess the risk associated with the investment

Tax Efficiency

Interest income earned from NCDs is taxable as per the investor's income tax slab, but tax-saving options such as investing in tax-free bonds or availing deductions under Section 80C may be available, enhancing tax efficiency

Corporate Fixed Deposits

Fixed Returns

Corporate fixed deposits offer fixed interest rates higher than traditional bank deposits, providing investors with predictable returns over the investment tenure.

Diverse Maturities

Investors can choose from various maturity options offered by different companies, ranging from short-term to long-term deposits, catering to different investment horizons.

Credit Rating

Corporate fixed deposits are assigned credit ratings by rating agencies, reflecting the issuer's creditworthiness and helping investors assess the risk associated with the investment.


While corporate fixed deposits typically have a lock-in period, they may offer premature withdrawal options with penalty charges, providing some liquidity to investors.

Tax Implications

Interest income earned from corporate fixed deposits is taxable as per the investor's income tax slab, potentially reducing overall returns, and investors should consider tax-saving options available

Capital Gains Bonds (54EC Bonds)

Tax Exemption

Investing in 54EC Bonds enables investors to claim tax exemption on long-term capital gains from the sale of assets such as real estate or stocks by investing the capital gains amount within six months of the sale

Stable Returns

54EC Bonds offer fixed returns over a specified tenure, typically issued by government entities or institutions with strong credit ratings, providing investors with stable and predictable income streams

Lock-in Period

While offering tax benefits, 54EC Bonds come with a lock-in period of three years, ensuring a stable source of funds for the specified duration and preventing premature redemption.

Low Risk

54EC Bonds are usually issued by government-backed entities, making them low-risk investments compared to other fixed-income securities, suitable for investors prioritizing capital preservation


Investing in 54EC Bonds can help investors diversify their investment portfolio by adding a tax-efficient fixed-income component, reducing overall portfolio risk and potentially enhancing long-term returns

Overview of how bond trading typically works

Market Participants
Various entities, including institutional investors, individual investors, bond dealers, and market makers, participate in bond trading
Bond Characteristics
Bonds have specific features like maturity date, coupon rate, credit rating, and yield, influencing their trading behavior.
Price Quotation
Bonds are quoted with their price and yield, indicating their current market value and potential returns to investors
Order Placement
Investors place buy or sell orders for bonds via brokers or trading platforms, specifying bond details, quantity, desired price, and other trading parameters
Buy and sell orders are matched, and trades are executed at agreed-upon prices. Bond dealers and market makers facilitate order matching and provide liquidity to the market.
Following execution, transaction settlement occurs, involving the transfer of bond ownership and funds. Settlement typically transpires a few days after the trade date

Bond trading is essential for investors to manage portfolios, generate income, and hedge risks. Simultaneously, it aids bond issuers in capital raising and effective debt management.

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