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N.K. Kurup

SEBI to come out with guidelines soon

Mumbai March 16 Investors will soon be able to buy and sell corporate bonds online on BSE and NSE as they do so now in shares.

Both BSE and NSE will start electronic order matching trading in corporate bonds from July 1.

The Securities and Exchange Board of India is expected to come out with guidelines for the purpose shortly.

SEBI's move to facilitate online trading in bonds assumes significance in the context of the Government's plan to develop a corporate bond market to help raise long-term funds for infrastructure.

To improve liquidity

This is also expected to help improve liquidity in corporate bonds. Trading system for corporate bonds is being developed as per the R.H. Patil Committee recommendations.

According to BSE officials, the exchange, which already has a reporting platform for trades in corporate bonds, will be ready with the trading platform soon.

Initially, the trading will be based on order matching system but not the anonymous systems. Once the trade matching system stabilises, it is expected that the two exchanges will go in for anonymous order matched trades in corporate bond as in the case of equity markets, said a SEBI source.

Banks and financial institutions will be allowed trading only through brokers.

SEBI is working on appropriate clearing and settlement system for corporate bond market so that it would be easier to introduce repos and online issuance of bonds by corporate entities, the source said. Both BSE and NSE have already set up reporting platforms to facilitate collection and dissemination of data on corporate bonds.

FIMMDA, the organisation of primary dealers in securities, has also recently been roped in to provide valued added information on corporate bond markets. SEBI has been going ahead vigorously with implementation of Patil Committee recommendations on corporate bonds.

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