SEBI simplifies yield computation and mandates standardized cash flow disclosures to enhance transparency in corporate bond trading and databases
The Securities and Exchange Board of India (SEBI) issued a circular dated May 16, 2025, simplifying the operational process for yield-to-price computation on the RFQ platform. The circular clarifies and standardizes the disclosure of cash flow schedules in the Centralized Corporate Bond Database.
Key Highlights
1. Simplification of Yield-to-Price Computation on RFQ Platform
Background: Chapter XXII of SEBI’s NCS Master Circular (May 22, 2024) deals with trade execution and settlement of listed debt securities on the RFQ platform.
New Guideline:
- For yield-to-price computation of non-convertible securities traded on RFQ, the cash flow dates used will be the due dates of payment, as per the cash flow schedule.
- They will not be adjusted based on day count convention (i.e., the standard number of days used to compute accrued interest).
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2. Disclosure of Cash Flow Schedules in Corporate Bond Database
Current Gap:
- Although issuers disclose cash flow schedules (including interest, dividend, and redemption payments) in offer documents, this information is not yet captured in SEBI’s centralized corporate bond database.
New Requirement:
- Issuers must now disclose this cash flow schedule at the time of ISIN activation, using the following format:
| Sr. No. | Particulars (Interest/Dividend/Redemption) | Due Date | Payment Date (as per day count convention) |
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Updates Required:
- Any changes to the cash flow schedule during the life of the security must be updated in the database within one working day.
Application:
- Applies to all new issuances after the effective date.
- Also applies to the remaining maturity of already listed ISINs.
3. Applicability and Effective Date
- The provisions will come into effect from August 18, 2025.
- Applicable to new debt issuances and the residual maturity of currently listed ISINs.
4. Directions to Stock Exchanges
Stock exchanges must:
- Inform market participants.
- Disseminate this circular publicly.
- Update their bye-laws and regulations to align with this directive.
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