Corporate Bond Trades Should Take Place Through Exchange

Mumbai, September 16: | Updated: Sep 17 2003, 05:30am hrs
Transparency is an issue which rules the mind of most experts related to the capital markets and according to Crisil Fund Services (CFS) which has been rating the performances of mutual funds for more than three years now, the corporate bond trades should take place through the exchange just like in the case of equities that will bring in a greater amount of transparency.

Speaking on the sidelines of a press conference to announce the Crisil Best Funds Awards 2003 which are to be held on September 24, 2003, Mukkarram Bhagat, chief executive officer (CEO), Crisil Fund Services said, If corporate bond trades are routed through the exchange the data would be available and it will lead to transparency and better price discovery just like the case of equity trades. Although some of the bonds are traded through the wholesale debt market (WDM) segment of the National Stock Exchange (NSE), there should be compulsory routing through the exchange.

Mr Bhagat also pointed out the risks associated with concentration of securities which leads to greater risks in the portfolio of schemes. If there is too much exposure in a particular sector of a fund then it poses a risk to future performance. Therefore excessive deviation incurs higher risks, Mr Bhagat added.

The awards to be held by Crisil are based on the composite performance ranking (CPR) methodology developed by CFS and spans across six categories of open-ended schemes including equity diversified, income, balance, liquid, income short-term and gilt long term.