In a bid to increase market activity, SEBI has proposed to set up a platform for online sale of privately-placed corporate debt. Technically called electronic book, the platform enables improvement in efficiency, transparency of the price discovery mechanism and also reduction in cost and time taken for such issuance.
The market regulator has proposed two approaches to set up the electronic book platform. In the first model, the electronic book may be provided as an alternative to the existing mechanism. Subsequently, based on the performance acceptability of such a book, this could be made mandatory for all issuers for issuance of privately-placed non-convertible debentures that are proposed to be listed.
In the second model proposed by SEBI, the electronic book will be made mandatory for all private placement issues having a threshold of ₹500-1,000 crore in terms of the amount being raised.
In order to enable issuers to use the electronic book for private placement of corporate bonds, which are proposed to be listed, it is proposed to create a platform for creation of the electronic book, which would be provided by an entity to be called Electronic Book Provider (EBP). In order to enhance transparency, self-bidding by EBP may not be allowed. However, if safeguards, such as bidding on arms-length basis are in place, SEBI may consider the same.
Entities such as stock exchanges, depositories and merchant bankers, with net worth of above ₹100 crore may apply to SEBI for setting up EBPs. Public comments have been invited till December 18.