SEBI to allow exchanges a separate window for debts

Our Bureau Mumbai | Updated on January 25, 2013 Published on January 25, 2013

Stock market regulator SEBI has decided to provide a dedicated debt segment on stock exchanges to enhance the quality of trading infrastructure.

This segment will offer separate trading, clearing and settlement in Government Securities (G-Secs), Treasury Bills, State Government loans, bonds issued by financial institutions (SLR and non-SLR), municipal bonds, single bond repos, basket repos, CBLO (collaterised debt) type products and securitised debt instruments.

Reporting facilities and membership in the segment will also be separate. The instruments will be subject to RBI approval wherever required, said SEBI.

Through many avenues

Stock exchanges desirous of setting up debt segment may apply providing necessary operational, regulatory and any other details.

Outlining the broad framework of the debt segment, SEBI said all listed securities would be traded electronically using screen-based trading providing for order matching, request for quote and negotiated trades.

Trading facility would also be provided over the Internet, mobile phones and direct market access, said SEBI.

There would be separate retail and institutional trading platforms in the debt segment.

The retail trading platform will deal only in publicly-issued debt instruments with both proprietary and client trades being allowed.

The institutional market would be a trading platform for non-publicly issued debt instruments and have a market lot size of minimum Rs 1 crore.

Trading hours would be between 9 a.m. and 5 p.m. Institution trades would be settled on a T+1 basis while retail trades on a T+2 basis. Retail investors have to bring in 10 per cent margin for debt market instruments rated AA and above. Exchanges have been asked to fix appropriate margin requirements for institutional trades after obtaining prior approval from SEBI.

Brokers have to register afresh for both retail and institutional segment of exchanges.

Market making has been allowed through merchant bankers, issuers through brokers or any other entity. Exchanges have to report trade information to a SEBI specified common trade repository, said SEBI.

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Published on January 25, 2013
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