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JC - Legal Updates - SEBI to regulate online bond trading platforms

Legal Updates

25 Jul 2022

SEBI to regulate online bond trading platforms

The Securities and Exchange Board of India (“SEBI”) has proposed to regulate activities undertaken by online bond trading platforms (“Bond Platforms”) that sells debt bonds to investors, primarily comprising retail and non-institutional buyers. SEBI has proposed and invited recommendations on the following:

1)   The Bond Platforms should register as stock-brokers (debt segment) with SEBI or be run by SEBI- registered brokers. This will require entities running Bond Platforms to comply with the Securities and Exchange Board of India (Stock Brokers) Regulations, 1992;

2)   the securities offered by Bond Platforms for buying and selling shall only be listed debt securities;

3)   the listed debt securities so issued on private placement basis, offered for sale on Bond Platforms shall be locked-in for a period of six months from the date of allotment of such debt securities by the issuer; and

4)   Bond Platforms are required to channelize transactions through exchange platform (debt segment) or via Request for Quote Platform (“RQF”).

SEBI on 21st July, 2022 issued a consultation paper titled Online Bond Trading Platforms - Proposed Regulatory Framework with respect to the above. Comments are invited till 12th August, 2022.

SEBI | Consultation Paper on Online Bond Trading Platforms - Proposed Regulatory Framework

For any further information, please contact Ms. Apurva Kanvinde (apurva.kanvinde@jclex.com) or Mr. Smit Parekh (smit.parekh@jclex.com).