SEBI exploring DLT-based tokenisation for corporate bond market: Tuhin Kanta Pandey
New Delhi, May 26
Market regulator Securities and Exchange Board of India has initiated a pilot project to explore tokenisation of corporate bonds using distributed ledger technology, a move that could enhance liquidity and enable faster settlement in the debt market, SEBI Chairman Tuhin Kanta Pandey said on Tuesday.
Pandey further stated that the pilot is aimed at assessing how blockchain-based systems can improve efficiency in bond trading and settlement, while also addressing associated risks.
"It's a pilot project that we have decided to initiate on use of DLT for tokenisation of corporate bonds," Pandey told reporters.
He said corporate bonds in India are already traded on existing platforms, but the regulator is evaluating whether DLT-based tokenisation can further improve market functioning.
"We are saying whether we can use the DLT and tokenisation method for bonds as well. Once you do that, there will be a greater possibility of more liquidity and instantaneous settlement," he said.
Pandey added that it will help bring together stakeholders and test an operational and technological model before wider implementation.
According to him, the Reserve Bank of India (RBI) has already issued draft guidelines on the subject and is expected to come out with final norms soon. SEBI and exchanges, he said, are ready to roll out the framework once regulatory clearance is received.
On global equity markets, the SEBI chief said investor enthusiasm around artificial intelligence (AI), chips, memory and other electronics linked to AI infrastructure is currently driving valuations across key jurisdictions.
"Some of the leading companies at this moment are those related to AI directly or indirectly," he said.
On comparisons between India and Taiwan in market capitalisation trends, Pandey said India remains a diversified market, unlike Taiwan, where a few large technology companies dominate valuations.
— IANS
Reader Comments
Interesting move, but I'm concerned about cybersecurity. The bond market deals with huge sums, and any blockchain vulnerability could be catastrophic. Hope SEBI has robust safeguards before scaling up.
DLT for bonds sounds promising, but let's not forget the basics. First, ensure settlement times improve for retail investors too. Second, what about stamp duty and tax implications on tokenised bonds? SEBI should coordinate with the finance ministry on this.
Great to see SEBI experimenting with tech like this! Having traded corporate bonds in both Indian and US markets, I can say liquidity is indeed a pain point. Blockchain could help fractionalise bonds and attract more participants. My only worry: will it increase costs for smaller issuers?
Impressive vision from Tuhin Kanta Pandey. He's right that India is far more diversified than Taiwan, but the AI-driven market frenzy needs caution. On bonds, DLT tokenisation could finally make corporate bonds accessible to retail investors. Let's see if this pilot leads to real change or just stays a pilot!
Very positive step. Tokenisation could reduce counterparty risk and settlement delays. However, I hope SEBI ensures that the tech doesn't create new forms of market manipulation. Also, need clarity on whether existing bond holders can convert their holdings to tokenised form seamlessly.
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