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Source: The post is based on the article “SEBI puts in place registration, regulatory framework for online bond platform providers” published in Livemint on 16th November 2022
What is the News?
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.
What is an Online Bond Platform?
As per SEBI, an Online Bond Platform is an electronic system other than a recognised stock exchange or an electronic book providing a platform on which debt securities are listed or proposed to be listed are offered and transacted.
The online bond platform provider means any person operating or providing such a platform.
Why regulatory framework for Online Bond Platform Providers (OBPPs)?
During the past few years, there has been an increase in the number of OBPPs offering debt securities to non-institutional investors. Most of them are fintech companies or are backed by stock brokers.
However, the operations of OBPs were outside SEBI’s regulatory purview. Hence, this regulatory framework has been issued.
What are the key provisions of the regulatory framework for OBPPs?
Online Bond Platform Providers(OBPPs) would be companies incorporated in India and they should register themselves as stockbrokers in the debt segment of the stock exchange.
OBPPs cannot offer products or services on its platform except listed debt securities and debt securities proposed to be listed through a public offering.
Further, the OBPPs would have to ensure compliance with the minimum disclosure requirements. It would also have to disclose on its platform all instances of conflict of interest, if any, arising from its transactions or dealings with related parties.