Sebi allows brokers to place bids on RFQ platform on behalf of clients to boost corporate bond market

Capital markets regulator Sebi on Wednesday allowed stock brokers to place bids on the RFQ platform on behalf of their clients to facilitate wider participation in the corporate bond market.

This is in addition to the existing option of placing bids in a proprietary capacity, the Securities and Exchange Board of India (Sebi) said in a circular.

The RFQ or Request for Quote platform is a system or interface for inviting and/or giving quotes on an electronic platform.

The platform was introduced as a 'participant-based' model, wherein all regulated entities, listed corporate bodies, institutional investors and all Indian financial institutions were eligible to register, access and transact.

To enhance liquidity on the RFQ platforms of the stock exchanges, Sebi has mandated registered mutual funds and portfolio management services to undertake a specified percentage of their total secondary market trades in corporate bonds through RFQ platform. IRDAI has also prescribed similar stipulations for insurers.

Now, Sebi has decided to "allow stock brokers registered under the debt segment of the stock exchange(s) to place or seek bids on the RFQ platform on behalf of client(s), in addition to the existing option of placing bids in a proprietar capacity".

These new rules will come into force with effect from January 1, 2023.

The securities eligible for being traded on the RFQ platform are -- non-convertible securities, securitised debt instruments; municipal debt securities, commercial paper; government securities, state development loans and treasury bills.

Stock exchanges have been asked to put in place the necessary infrastructure for access and use of the platform by the participants including stock brokers and issue necessary circular(s) covering the modalities for operational aspects.