With a dominant part of the outstanding stock thus residing in HTM portfolio and out of the market the low volume of trading is but natural. The term HTM, however, appears to be an illusion as securities are almost never held till they mature but are sold at an opportune time.
Such an investment strategy impacts liquidity of the security, in particular, and the market, in general. While the changes imminent in accounting norms under the International Financial Reporting Standards (IFRS) may force transformation of the strategies of banks, there is a need for debate on the issue of reduction in the HTM category dispensation, albeit in a phased manner.