SEBI proposes to open GIFT City doors for bond platforms

The Intent: SEBI has floated a consultation paper proposing significant changes to the regulatory framework for Online Bond Platform Providers (OBPPs), aimed at improving India's bond market ecosystem and ease of doing business.

Allowing IFSCA Products: OBPPs may soon be permitted to offer products regulated by IFSCA, including access to overseas-listed debt securities through GIFT City platforms. Currently, OBPPs can only distribute products regulated by domestic regulators like SEBI, RBI, IRDAI and PFRDA, leaving a gap in global fixed income access.

Allowing 54EC Bonds: SEBI has proposed allowing OBPPs to distribute tax-saving 54EC bonds issued by public sector enterprises such as PFC, IRFC and REC. Since these bonds are currently exempt from mandatory listing, their inclusion on OBPP platforms has remained ambiguous.

Platforms will need to clearly disclose lock-in periods, investment limits, tax benefits and the non-transferable nature of these bonds.

Relaxed Compliance Officer Norms: Currently, OBPPs must appoint a Company Secretary as compliance officer, a requirement not uniformly applied across other SEBI-regulated intermediaries. SEBI has now proposed aligning this requirement with stock broker regulations for greater consistency.

The Bigger Picture: These proposals collectively aim to expand the product range on bond platforms, reduce regulatory ambiguity and harmonize compliance standards, making OBPPs more competitive and investor-friendly.

This is a brief overview of SEBI’s proposed reforms for Online Bond Platform Providers (OBPPs) and their impact on India’s bond market ecosystem. To know more in detail, click here.