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K.R.Srivats

New Delhi June 24 Secondary market trading of corporate bonds may get a boost at the large stock exchanges, with the capital market regulator close to finalising new regulations on exchange-traded corporate bonds.

Official sources said that the Board of Securities and Exchange Board of India (SEBI) is likely to consider this issue at its forthcoming meeting on June 30.

Penultimate stage

"We are at the penultimate stage. The work on regulations are almost complete and likely to be considered for approval by the SEBI board at its next meeting", sources added.

The SEBI Chairman, Mr M Damodaran, had during his recent visit here hinted that trading platform on corporate debt would soon get operationalised at major centres like the stock exchange, Mumbai and the National Stock Exchange (NSE).

Already, trade-reporting platform had been operationalised from January 1 this year.

Currently, the corporate debt market in the country is largely an over-the-counter (OTC) market in which some large banks and certain mutual funds are the main participants. The retail investment in corporate bond market is negligible. The secondary market for corporate bonds has remained illiquid with only a limited number of institutions/banks participating in the same.

The Government had set up a high-level committee on corporate bonds and securitisation (Patil Committee) to look into the legal, tax, regulatory and market design issues in the development of corporate bond market.

This committee had submitted its report to the Government in December 2005.

The Budget 2006-07 announced that the Government has accepted the recommendations of the report and that steps would be taken to create a single, unified, exchange-traded market for corporate bonds.

More Stories on : Corporate Bonds | Regulatory Bodies & Rulings

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