News Highlight
The Securities and Exchange Board of India (Sebi) has developed a detailed regulatory framework for online bond platform providers to streamline their operations.
Key Takeaway
- There has been an increase in the number of Online Bond Platform Providers (OBPPs) offering debt securities to non-institutional investors of late.
- There has also been a rise in the number of registered users transacted through such OBPs.
Online Bond Platform Providers
- About
- An online bond platform is defined as any electronic system (other than a recognised stock exchange or an electronic book provider platform) on which listed debt securities are offered or transacted.
- An individual who provides or operates such a platform is called the online bond platform provider.
- Bonds
- A bond is a fixed-income instrument representing an investor’s loan to a borrower. In simpler terms, a bond is a contract between the investor and the borrower.
- Bond issue
- Corporations and governments typically issue bonds, and investors purchase them as a form of savings and security.
- Government Bonds
- A country’s government issues Government Bonds at a fixed interest rate. These bonds are thought to be low-risk investments.
- Treasury Bills, Municipal Bonds, Zero-coupon Bonds, and other types of government bonds are examples.
The New Rules for Online Bond Platform Providers
- Registration certificate
- After obtaining registration as a stock broker in the debt segment of a stock exchange, an entity would have to apply to the bourse to act as an OBPP.
- The new rules mandate registration certificates as a stock broker from SEBI to act as an online bond platform provider.
- Period
- Those acting as online bond platform providers without registration certificate providers before 9th November 2022 continue to do so for three months.
Securities and Exchange Board of India (SEBI)
- About
- SEBI is a statutory body established in 1992 following the provisions of the Securities and Exchange Board of India Act 1992.
- Aims
- To protect the interests of investors in securities and to promote the development of and regulate the securities market.
- It is the regulator of India’s securities and commodity market owned by the Government of India.
- Powers and Functions
- It is a quasi-legislative and quasi-judicial body which can draft regulations, conduct inquiries, pass rulings and impose penalties.
- To protect the interests of Indian investors in the securities market.
- To promote the development and hassle-free functioning of the securities market.
- To regulate the business operations of the securities market.
- To serve as a platform for portfolio managers, bankers, stockbrokers, investment advisers, merchant bankers, registrars, share transfer agents and others.
- To regulate the tasks entrusted to depositors, credit rating agencies, custodians of securities, foreign portfolio investors and other participants.
- To educate investors about securities markets and their intermediaries.
- To prohibit fraudulent and unfair trade practices within the securities market and related to it.
- The structure of SEBI
- SEBI Board consists of a Chairman and several other whole-time and part-time members.
- SEBI also appoints various committees whenever required to look into the pressing issues of that time.
- Securities Appellate Tribunal
- SAT is a statutory body established under the provisions of the Securities and Exchange Board of India Act, 1992.
- A Securities Appellate Tribunal (SAT) has been constituted to protect the interest of entities that feel aggrieved by SEBI’s decision.
- It has the same powers as vested in a civil court. Further, if any person feels aggrieved by SAT’s decision or order can appeal to the Supreme Court.
Content Source: Indian Express