Sebi guidelines for separate debt segment issued

Move aimed to boost corp debt market

The Securities and Exchange Board of India (Sebi) has come out with guidelines to  set up a separate debt segment on bourses under which scheduled banks and other entities such as pension funds can also execute trades.

In a circular issued on Thursday, Sebi said the move is aimed at giving a boost to the country's corporate debt market and this debt segment would provide separate trading, reporting and membership, other than clearing and settlement rules.  By and large, debt securities are debentures, bonds, deposits, notes or commercial paper. 
In the proposed debt segment, trading would occur from 0900 hours to 1700 hours. 

“Institutions such as scheduled commercial banks, primary dealers, pension funds, provident funds, insurance companies, mutual funds... Can trade on the debt segment either as clients of registered trading members or directly as trading member on proprietary basis only,” the said. 

Further, the circular said, “Such institutions desirous of trading on own account only shall be given trading membership under Sebi (Stock Broker and Sub-Broker) Regulations, 1992 as proprietary trading member.”

The market for debt securities differs from equity markets in several ways.

Sebi also said that an existing stock exchange or new bourse willing to set up debt segment is required to make an application with it providing operational, regulatory and any other necessary details.

The the minimum capital deposit required to be maintained by a stock broker for trading in the debt segment would up to Rs 50 lakh.

To infuse liquidity into the market, the regulator explained that market makers will be permitted in the debt segment, while “market making may be provided by merchant bankers, issuers through brokers or any other entity as may be specified.”

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