The Securities and Exchange Board of India (SEBI) on October 16, 2024, issued a circular regarding the introduction of a Liquidity Window facility for investors in debt securities through a Stock Exchange mechanism
The Corporate bond market serves as a critical source of funding for the issuers whilst providing an investment avenue for the investors. SEBI has been undertaking various measures to widen the investor base and also to encourage participation and transparency in the corporate bond market. Some of the measures include introduction of the electronic book Provider platform (EBP Platform) for debt securities issued on private placement basis, exceeding issue size Rs 50 crores, ‘Request for Quote’ (RFQ) platform for secondary market transactions, reduction in the face value of debt securities issued on private placement basis (proposed to be listed), introduction of framework for Online Bond Platforms (refer https://www.sebi.gov.in/online-bond-platform-providers.html), introduction of corporate bonds repo platform operated by AMC Repo Clearing Limited (refer www.arclindia.com), etc.
An entity issuing debt securities, which are proposed to be listed, may at its option/discretion provide the Liquidity Window facility as envisaged in this circular for the debt securities, on an ISIN basis, at the time of issuance of such debt securities and make such Liquidity Window facility available to the eligible investors as specified in para 6.3 of this circular.
The Liquidity Window facility can be provided only for prospective issuances of debt securities through the public issue process or on a private placement basis (proposed to be listed) as specified in paragraph 7.
The features and the conditions governing the Liquidity Window facility shall be as follows:
• Authorizations and guardrails
• Debt securities eligible for the Liquidity Window facility, exclusion from ISIN count
• Eligibility of investors to avail of the Liquidity Window facility
• Aggregate limit of Liquidity Window facility and per liquidity window sub-limit:
• Designated Stock Exchange
• Period of liquidity window
• Mode and manner of availing the Liquidity Window facility
• Valuation of debt securities, amounts payable and the date of payment
• Dealing with debt securities received by issuer pursuant to put option
• Reporting and disclosure requirements
The provisions of this circular shall be applicable on and from November 01, 2024.
[Circular No. SEBI/HO/DDHS/DDHS-PoD-1/P/CIR/2024/141]
