The Securities and Exchange Board of India (SEBI) on July 05, 2023, issued the Consultation Paper on mandating FPIs to route a specific percentage of certain transactions in secondary market trades through the (RFQ) platform of stock exchanges
The objective of this consultation paper is to increase the liquidity on the Request for Quote platform of stock exchanges and enhance the transparency and disclosures pertaining to investments in Corporate Bonds, which shall encourage investment by FPIs in the corporate bond segment
The following has been proposed namely: -
• It states that the RFQ platform is expected to bring advantages for trading in corporate bonds and facilitate investments in this segment.
• The RFQ platform shall reduce information asymmetry and enhances transparency in the corporate debt segment by providing disclosures such as term sheets, price information, market quotes, etc. This is expected to result in better price discovery lower cost and ease of doing business etc.
• It states that the various advantages brought in by the RFQ platform are expected to propel Indian bond markets into a higher growth phase, thereby promoting investments in the segment by all participants, including FPIs, the same can be achieved if the participation on the platform is deepened and widened due to adoption by the maximum number of participants resulting in greater volume of trades.
• it is further proposed that FPIs may be mandated to undertake at least 10% of their total secondary market trades in Corporate Bonds by value by placing/seeking quotes on the RFQ platform of stock exchanges, on a quarterly basis, to start with.
• It states that the requirement may be made applicable after 2 months from the date of issuance of the respective circular.
Public comments are invited for the proposals given above. The comments and suggestions may be provided in an MS Excel file as per the format attached
Comments as per aforesaid format may be sent to the following, by latest by July 26, 2023, in any of the following manner namely: -
(i) Preferably by email to [email protected], with a copy to Mr. Arpit Anand, Assistant General Manager ([email protected]) and Ms. Chitra M, Manager ([email protected])
(ii) By post to: ShriVikash Narnoli, Deputy General Manager, Alternative Investment Fund and Foreign Portfolio Investors Department, Securities and Exchange Board of India, SEBI Bhavan, C4-A, G-Block, Bandra Kurla Complex, Bandra (East), Mumbai -400051
