Bond tokenisation pilot likely in 6-9 months: SEBI chief
Mumbai, June 8
The markets regulator is preparing to roll out a bond tokenisation pilot within six to nine months, while also advancing a wide-ranging reform agenda covering corporate bond liquidity, broker capital norms, IPO price discovery and foreign investor access, SEBI Chairman Tuhin Kanta Pandey said on Monday.
The initiative is being seen as a key step toward improving participation in India's debt markets and making fixed-income instruments more accessible and efficient.
"The regulator is expected to roll out a pilot for bond tokenisation within six to nine months," Pandey said while speaking at the ICICI Securities India Investor Conference here.
On the corporate bond market, Pandey said SEBI is working on a market-making framework aimed at improving liquidity in secondary trading.
He also noted that coordination with the Reserve Bank of India remains crucial for upcoming reforms, particularly as the central bank has already released draft guidelines on total return swaps and corporate bond derivatives earlier this year.
"These products are expected to move forward once the regulatory framework is finalised," he explained.
The renewed focus on bonds comes despite rapid growth in issuance volumes, with corporate bond issuances crossing Rs 9 lakh crore.
Overall market capitalisation has risen to around 128 per cent of GDP, while mutual fund assets have climbed beyond Rs 80 lakh crore.
However, SEBI acknowledged that liquidity in the secondary bond market remains relatively shallow compared to the size of the system.
"A revised methodology introduced by SEBI using granular market-level data and a wider coverage of instruments now presents a more accurate picture of this strength," he noted.
"Together, these developments show a clear shift: Capital markets are increasingly becoming a core avenue for household savings and wealth creation," Pandey stated.
In another major reform area, SEBI is reviewing variable net worth requirements for stock brokers.
Pandey said the proposal is still under examination and no final decision has been taken, indicating that the framework could be recalibrated to balance capital adequacy with operational flexibility for intermediaries.
— IANS
Reader Comments
Good to see SEBI and RBI coordinating on this. Corporate bond market liquidity has been an issue for years. Market-making framework could really help. But I'm cautiously optimistic - implementation is key in India.
Interesting development. Tokenisation could democratise bond investing, but what about investor education? Many retail investors don't understand bonds yet. SEBI should focus on awareness campaigns alongside these reforms.
The fact that mcap is 128% of GDP shows how deep our capital markets have become. But secondary bond market liquidity? It's still a joke for retail investors. Let's see if tokenisation actually changes that or remains a niche product.
As a small investor, I'm happy SEBI is thinking about these reforms. But broker capital norms - that could hurt smaller brokers. Hope the regulator finds the right balance. We don't want another NSEL-like crisis.
Tokenisation is a global trend and India should lead in fintech innovation. But 6-9 months for a pilot? Feels slow. Also, how will taxation work for tokenised bonds? That's a big question for investors.
Sensible reforms by SEBI chief. But one concern - will tokenisation increase systemic risk?
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