AOFM anounces ASX trading of bonds Australian government bonds will be traded on the Australian Securities Exchange from May 21. The announcement was made on Wednesday by the Australian Office of Financial Management, which manages Australian government debt. The new arrangement will allow investments in Treasury Bonds and Treasury Indexed Bonds in the form of CHESS Depositary Interests (CDIs). These new instruments will be called Exchange-traded Treasury Bonds (eTBs) and Exchange-traded Treasury Indexed Bonds (eTIBs). They will be traded in the same way as shares listed on the ASX. The AOFM said the move was part of a package of measures, announced by the government in 2010, to promote "a competitive and sustainable banking system." "These measures included assisting the development of a deep and liquid corporate bond market," it said. One way this can be achieved is by launching the trading of Australian government bonds on a securities exchange. The AOFM said the move would give retail investors a better guide to pricing of corporate bonds and to encourage them to diversify their investments. Existing holders of Treasury Bonds and Treasury Indexed Bonds will be able to convert their holdings respectively into eTBs and eTIBs once a facility to do that is developed. Until now, the small investor bond facility operated by the Reserve Bank of Australia allowed retail investors into the market otherwise dominated by large institutions trading multi-million dollar parcels of bonds. "As the market develops, buying and selling AGBs and corporate bonds may become as straightforward as purchasing shares is today," Treasurer Wayne Swan, and Financial Services Minister Bill Shorten said in a joint statement. They said it was part of a 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." The AOFM said the new arrangements would make that facility unnecessary and that investors would no longer be able to buy bonds through the RBA mechanism from May 21. However existing investors could still use it to sell their bonds for the time being. The AOFM said it had launched a new web site with information about the new scheme: www.australiangovernmentbonds.gov.au.