Sebi to soon float consultation paper on distribution framework for corporate bonds

Securities market regulator Sebi will float a consultation paper on the distribution framework for corporate bonds in the next few days, a senior official said on Tuesday.

"We are looking for a potential distribution framework for bonds. Work is in process, and the consultation paper in this regard will be out in a few days," said Maninder Cheema, Executive Director at Sebi, during a panel discussion of Great Indian Bond Festival by Grip Invest.

Cheema refrained from giving further details on the proposed norms to be added in the consultation paper.


The founder and group CEO of Grip Invest, an online bond platform, said that industry players and associations have made a recommendation to the Securities and Exchange Board of India (Sebi) regarding the framework.

Cheema further said that public issues account for less than 1 per cent of total bond issuance. Online bond platform access has been a huge initiative because it brings privately placed bonds to retail investors and makes them accessible to everybody.

"This is an innovation enabled by technology and by all the platforms that have come up to allow retail investors to access bonds that were previously not easily accessible," she said.

She added that price discovery is also important. Investors need to know the price, yield and other characteristics of a bond before making an investment decision.

The entire structure is evolving, and technology can make the process more transparent, accessible and efficient, she said.

On May 13, Sebi's whole-time member Amarjeet Singh said the regulator is evaluating a proposal to introduce a new category of distributors to deepen the debt markets and increase retail participation.

Singh cited the successful case of mutual funds and underlined the need for having distributors who can simplify the investment process for retail investors by assisting with KYC formalities, documentation and initiating transactions.