In an effort to broaden the market, market regulator — Securities & Exchange Board of India (Sebi), on Wednesday, said it was planning to introduce new products and frame regulations in the securitisation market by December.

Sebi along with other regulators is developing bond markets and the current limit on foreign participation in these markets will move away as the market develops in the next 12 months, Sebi Chairman M Damodaran said.

Mr Damodaran, however, did not specify the kind of products that would be introdcued into the market.

Products in pipeline

Addressing Fortune Global Forum here, Mr Damodaran said “some of those are tomorrow’s news and I don’t want to be specific.”

Earlier last month, Mr Damodaran had said, “new products such as interest and currency derivatives are required... there are some new products in the pipeline.”

On bond markets, the Sebi chief said, “there are limits on foreign participation in bond markets at this point of time. You will see that moving away as the market develops.” Later talking to reporters, he said: “We are not the ones who will raise these limits. Other people will raise them.”

Under current regulations, foreign investors can invest up to $3.2 billion in government bonds and up to $1.5 billion in corporate bonds in a year. He said issue of regulations in corporate bond markets has been resolved by regulators. “Those (regulatory issues) are behind us. We know who is to do what,” he said.

Stating that Sebi is moving fast on R H Patil Committee’s recommendations on corporate debt, Mr Damodaran said, so far as Patil Committee recommendations are concerned, those we need to address we have either completed or are in the process of completion.

Legal framework

However, full implementation of the report would take some time as some legislations are also required to be put in place, Mr Damodaran said. On unregulated securitisation market, he said regulations would be framed on this market by the year-end.

Sebi has invited public comments on regulations for securitisation market, he added. The draft regulations follow passage of the Securities Contracts (Regulation) Amendment Act, 2007 with a view to providing a legal framework for enabling listing and trading of securitised debt instruments.

The proposal points out that SEBI will regulate the activity of public issue of or listing of the securitised debt instruments by registering special purpose distinct entities engaging in regulated activities like public offer, listing, related disclosures and compliances.

Securitisation is a device of bilateral acquisition of portfolios of finance companies. Finance companies can sell their pool of loans to other entities through commercial paper.