SEBI's Market-Making Push to Boost Corporate Bond Liquidity, Says Chairman

While speaking with ANI, Pandey said that for India's corporate bond market, which is currently around 16% of GDP, SEBI has taken several enabling measures.

"These measures included the Electronic Book Provider (EBP) platform for price discovery in primary issuances beyond a specified threshold, the Request for Quote (RFQ) platform to facilitate two-way quotes in the secondary market, and the online Bond Platform Providers (OBPPs) to allow retail investors to buy corporate bonds," Pandey said.

He said the next phase of reforms must focus on expanding the issuer base and improving the depth of issuances.

"Today, most issuances are AAA or AA-rated bonds. We need deeper markets, including for lower-rated bonds, which requires bringing issuers and investors together and facilitating more robust secondary trading," he said.

Pandey also told that the proposed market-making framework, announced by the Finance Minister in the Union Budget, will primarily focus on improving liquidity in the secondary market.

He further pointed to recent policy moves on bond derivatives, including bond index derivatives and total return swaps.

"RBI has recently proposed a framework for total return swaps and bond index derivatives. These steps, taken together, will support the development of the corporate bond market," he said.

On SEBI's plans to strengthen its regional presence, Pandey said the regulator currently operates four regional offices and one local office in Indore.

"We will be opening eight more offices very soon. The expansion will enhance SEBI's reach and regulatory effectiveness at the state level," he said.

Addressing concerns about balancing frictionless onboarding with Know Your Client (KYC) norms, Pandey said the proposed Swagat FI category would apply to a select group of "trusted" financial institutions such as sovereign funds, publicly traded funds, insurance funds and certain FPIs.

"These entities will be able to come under the Swagat FI framework, where we will provide a much longer registration period and enable them to undertake multiple activities under a single licence," Pandey said.

He added that the framework is designed to improve ease of doing business for credible and well-regulated global investors, while maintaining necessary regulatory safeguards.

- ANI