Sebi proposes FPIs trade some corporate bonds on RFQ

Mumbai: The Securities and Exchange Board of India (Sebi) has proposed to mandate foreign portfolio investors (FPIs) to undertake at least 10% of their total secondary market trades in corporate bonds by value on the request for quote (RFQ) platform of stock exchanges.

The move is aimed at increasing liquidity on the RFQ platform of stock exchanges and enhancing disclosures pertaining to investments in corporate bonds. In 2020, the RFQ platform was launched on BSE and NSE. It is an electronic platform that enables sophisticated, multilateral negotiations to take place on a centralised online trading platform with straight-through processing of clearing and settlement to complete the trade. By acting as a single interface for price givers and price takers in the debt market from a diverse set of clients, the RFQ platform helps in enhancing price discovery and brings pre-trade transparency in the transactions of eligible securities.

A wide variety of debt securities are traded on the RFQ platform including corporate bonds, securitized debt instruments, CPs, certificates of deposits, municipal debt securities, government securities, treasury bills and state development loans. During FY23, FPIs carried out only 4.5% of total trades in corporate bonds through the RFQ platform. Further, during the same fiscal year, FPIs accounted for only 0.78% of total trades in corporate bonds on the RFQ platform.