SEBI to launch pilot for bond tokenisation; eases FPI onboarding process

“Let me clarify that this is not about creating a separate trading market. It is about examining whether technology can make the existing bond market simpler, faster and more efficient,” Singh said.

The comments come as the regulator has been pushing to deepen the bond market to provide capital to fuel growth in the country. It is also consulting on a “Credit Risk-o-Meter” for debt securities to improve investor protection in a market that has been gaining traction.

Risk-o-Meter to protect investors

The Risk-o-Meter would be a “standardized, color-coded visual scale mapped to existing credit-rating symbols. It would be displayed in the offer document as well as on platforms through which the securities are sold, together with the rating and the name of the credit-rating agency,” Singh said.

The regulator also plans to improve distribution of the corporate bond market and will “shortly” come up with a framework for fixed income channel partners, similar to the distributors seen in the case of mutual funds. These channel partners will be certified through the National Institute of Securities Markets.

“Channel partners would neither handle client funds or securities nor charge investors separately. The objective is to expand reach while maintaining clear accountability and investor safeguards,” clarified Singh.

Digital Power of Attorney for FPIs

In a separate development, the regulator on Thursday eased the onboarding process for foreign portfolio investors (FPIs) by allowing them to submit a digitally signed Power of Attorney to their custodians.

A Power of Attorney is a document that allows FPIs to authorise custodians to act on their behalf. Custodians, meanwhile, are SEBI-registered financial institutions that are responsible for holding, safeguarding, and managing the investments of FPIs.

This measure, which comes into effect immediately, “eliminates the need for notarisation, apostillisation or consularisation of Power of Attorney, thereby reducing the overall time taken for FPI onboarding and improving ease of doing business for FPI applicants,” the regulator noted in its circular on Thursday.

It comes as part of measures introduced by SEBI — like a common application form for registration — to reduce compliance and enhance the ease of business for FPIs.