Online Bond Trading Platforms: SEBI issues Consultation Paper, Invites Comments

Online Bond Trading Platforms - SEBI - Consultation Paper - taxscan

The Securities Exchange Board of India (SEBI) has issued a consultation paper and has invited comments on the Online Bond Trading Platforms.

Debt securities can be issued either through a public issuance or on private placement basis. A Public issue of debt securities is made through the on-line system of the Stock Exchanges and Depositories. For privately placed debt securities, the Board has issued a list of debt securities that have to be mandatorily made through Electronic Book Provider Platform (EBP Platform). These are applicable in case of issuers who are in existence for three years and more, where the issue size is of Rs.100 crore or more and the issuers in existence for less than three years, irrespective of the issue size.

“This perhaps explains why a number of online bond platforms have mushroomed over the past two to three years, which sell debt securities to investors, particularly noninstitutional investors. Some of these platforms seemingly operate in a manner similar to organized avenues for trading a’la market infrastructure institutions, especially stock exchanges, bringing together buyers and sellers (most often only the platform providers) for executing trades in debt securities. While these bond platforms do tap a group of investors, particularly non-institutional investors to invest in bonds, they do not come under any regulatory purview i.e. the platform providers are not registered with any regulator. This has given rise to a need to guide and regulate these platforms in order to bring about, inter-alia, regulatory oversight, common standard practices, investor redress mechanism etc. Towards this end, this paper attempts to bring forth the salient features of such bond platforms and proposes framework for regulating them,” the Board said.

“Public comments are invited for the proposed regulatory framework for the online bond platforms that are selling listed debt securities,” the Board said.

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