The Securities and Exchange Board of India (Sebi) has proposed to permit online bond platform providers (OBPPs) to broaden their operations in the GIFT International Financial Services Centre (IFSC), it said in a consultation paper on Tuesday.
Under the guidelines, Sebi proposed allowing OBPPs to offer products or securities or services regulated by IFSCA. The existing regulatory framework does not explicitly permit them to offer such products.
Sebi cited the need for review following an IFSCA request to allow OBPPs to offer overseas-listed debt securities. Currently, stockbrokers can register as broker-dealers with IFSCA to conduct securities market activities there, but OBPPs cannot.
“Since OBPPs are registered with Sebi as a stock broker in the debt segment of stock exchanges, there is a need to consider permitting OBPPs to offer products/securities/services regulated by IFSCA,” the market regulator said.
Proposal for OBPPs
It is also proposed that OBPPs operate in the same manner as Sebi-registered stock brokers operating in GIFT-IFSC.
The Sebi also proposed to allow OBPPs to offer tax-saving bonds. The regulator further said that details of such bonds including, eligible issuers, lock-in period, investment limit, non-transferable status, tax features, and application size, should be disclosed to investors.
These proposals aim to expand the investor and product base to boost market participation, according to industry players.
“Expanding OBPPs’ scope will strengthen the fixed income ecosystem and enable access for US dollar instruments, especially as GIFT-IFSC emerges as a key hub. The proposal to allow platforms to offer tax saving bonds is a positive regulatory step to enhance online platforms’ role in capital raising for infrastructure growth,” said Vishal Goenka, co-founder, IndiaBonds.
Separately, Sebi also proposed to appoint a qualified company secretary as compliance officer for OBPPs, unlike stock brokers, for whom this requirement does not apply across all exchange segments.
“The proposal to include newer bonds and enhanced supervision by a compliance officer may create more interest for the bond market,” said Paras K Parekh, partner at CMS INDUSLAW.
Stakeholders can submit their feedback by May 26, Sebi said.