Sebi extends deadline for comment submission for proposals on market making mechanism

In a consultation paper, the regulator suggested that registered stockbrokers or merchant bankers can act as market makers in the corporate bond market, subject to minimum net worth requirements.

In a bid to enhance liquidity in the secondary market for corporate bonds, Sebi proposed a market-making mechanism in the corporate bond market in November 2021.
In a bid to enhance liquidity in the secondary market for corporate bonds, Sebi proposed a market-making mechanism in the corporate bond market in November 2021.

Markets regulator Sebi on Friday extended the timeline for submission of comments on proposals related to market-making mechanism in the corporate bond market to January 16, 2022.

In a bid to enhance liquidity in the secondary market for corporate bonds, Sebi proposed a market-making mechanism in the corporate bond market in November 2021.
It had sought public comments by December 16, 2021, but now the deadline has been extended to January 16, 2022.

The comments have to be sent to the regulator in the prescribed format.

In a consultation paper, the regulator suggested that registered stockbrokers or merchant bankers can act as market makers in the corporate bond market, subject to minimum net worth requirements.

To ensure the capital adequacy of a market maker, Sebi proposed that only those stockbrokers or merchant bankers that have an additional net worth of Rs 10 crore over and above the requirements of their respective Sebi’s rules should be permitted to act as market makers.

Market makers are entities that quote both a buy and sell price for corporate bonds to create liquidity in the secondary market.

The watchdog noted that a vibrant secondary market in corporate bonds can come about if the market-making mechanism is introduced.

Among others, Sebi outlined the responsibilities of a market maker and also suggested risk management and a governance framework.

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