The Australian Securities Exchange (ASX) said it welcomes the development as a prerequisite to the quoting of Australian Government bonds on a securities exchange in Australia.
Subject to regulatory clearance, trading is expected to begin in the first half of 2013.
Investors will access the market in the same way as they do for shares and other ASX-quoted securities, via their ASX participant, online broker or financial planner.
All benchmark bonds issued by the Australian Government, including Treasury Bonds and Treasury Indexed Bonds, will be available for trading.
The move is expected to diversify and reduce volatility in Australia's savings pool by allowing retail investors to broaden their investments beyond equities and into a fixed income asset class, the ASX said.
The ASX also said it expects improved economic competitiveness in Australia by generating the critical investor and asset class base and reduce Australia's reliance on offshore funding and exposure to movements in foreign exchange rates.
