The Securities and Exchange Board of India is considering to build corporate bond indices to encourage derivative trading, said Ananth Narayan, the whole time member, at ASSOCHAM National Council for Corporate Bonds event on Friday.
“We are now working with other regulators to see how do we actually popularise trading in corporate bond indices, which might lead to more awareness,” said Narayan, adding that it will likely take-off soon.
In January 2023, the market regulator issued a circular, permitting stock exchanges to introduce derivative contracts on indices of corporate debt securities rated AA+ and above. However, it did not pick up and Sebi is in a process to revive it now.
What did Narayan say?
The outstanding corporate bonds has risen from about Rs 17.5 lakh crore in March 2014 to about Rs 53.6 lakh crore as of March 2025, registering a CAGR of 12%, he said. However, he added, “when we celebrate and we publicly mention that the volumes in secondary markets have gone up dramatically, but we trade as much in secondary equity market in a single day as we do in corporate bonds over the course of a month.”
Narayan further highlighted the need of launching different kinds of instruments as investors’ risk appetite has grown significantly. “From an investor perspective, all of us know that asset allocation is the most crucial part of financial planning and investments. You can’t have all your eggs in one basket.”
Narayan on increase in interest from domestic investors
In the past years, Sebi has come with lot of initiatives to develop bond market including reduction of minimum investment amount to Rs 10,000 from Rs 1 lakh, introduction of bond central, and providing liquidity window facilities, among others.
The introduction of partial credit enhancement will help low rated issuers, said Narayan. “When you have so much interest from domestic investors for mid-cap, small-cap stocks, the need for us to expand the credit spectrum for corporate bonds also is an important aspect.” Sebi to build corporate bond index derivative trading soon