Sebi issues guidelines for separate debt segment on bourses
The capital market regulator said the debt segment would provide separate trading, reporting, membership, clearing and settlement rules.
The decision to have separate debt segment on the stock exchanges was taken at Sebi's (Securities and Exchange Board of India) board meeting last week.
Debt securities are debentures, bonds, deposits, notes or commercial paper. In the proposed debt segment, trading would occur from 0900 hours to 1700 hours.
"Institutions such as scheduled commercial banks, primary dealers, pension funds, provident funds, insurance companies, mutual funds... can trade on the debt segment either as clients of registered trading members or directly as trading member on proprietary basis only.
"Such institutions desirous of trading on own account only shall be given trading membership under Sebi (Stock Broker and Sub-Broker) Regulations, 1992 as proprietary trading member," Sebi said in a circular.
According to the regulator, the market for debt securities differs from equity markets in several ways such as risk, returns, liquidity, type of participants and method of trading.
"...publicly issued debt securities are listed, traded and settled in a manner similar to equity, privately placed debt is usually traded between institutional investors on 'Over the Counter' (OTC) basis. Such OTC transactions are mandatorily reported on reporting platforms at FIMMDA, BSE and NSE," Sebi said.
The regulator said an existing stock exchange or new bourse
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