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Sebi sets regulation for online bond providers

There has been an increase in the number of OBPPs offering debt securities to non-institutional investors of late.T here has also been a rise in the number of registered users who have transacted through such OBPs.

After obtaining registration as a stock broker in the debt segment of a stock exchange, an entity would have to apply to the bourse to act as an OBPP. (File photo)

The Securities and Exchange Board of India (Sebi) has come out with a detailed regulatory framework for online bond platform providers in a bid to streamline their operations.

Online Bond Platform Providers (OBPPs) would be companies incorporated in India and they should register themselves as stock brokers in the debt segment of the stock exchange, as per the framework that would be effective immediately. OBPPs cannot offer products or services on its platform except listed debt securities and debt securities proposed to be listed through a public offering.

Such an entity should be a company incorporated in India and register itself as a stock broker in the debt segment of the stock exchanges. “With the bond market offering tremendous scope for development, particularly in the non-institutional space, there is a need to place checks and balances in the form of transparency in operations and disclosures to the investors dealing with such online bond platforms (OBPs), measures for mitigation of payment,” it said.

There has been an increase in the number of OBPPs offering debt securities to non-institutional investors of late.T here has also been a rise in the number of registered users who have transacted through such OBPs.

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While OBPs provide an avenue for investors, particularly non-institutional investors to access the bond market, their operations were outside Sebi’s regulatory purview, the regulator noted. After obtaining
registration as a stock broker in the debt segment of a stock exchange, an entity would have to apply to the bourse to act as an OBPP.

In its application, the entity will have to ensure that roles and obligations, technology, operating framework — access and participation, Know Your Client (KYC) for on-boarding investors and sellers and risk profiling of investors — are complied with.

First published on: 15-11-2022 at 04:15 IST
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