Brain Booster for UPSC & State PCS Examination (Topic: SEBI Framework for Online Bond Providers)

Why in Broadcast?

To facilitate providers of online bond platforms that are selling listed debt instruments, the capital markets regulator Securities and Exchange Board of India (SEBI) has introduced a regulatory framework.

As per the new regulations, no one can act as an online bond platform without first acquiring a registration certificate from SEBI as a stock broker.
Such a person would have to abide by the registration criteria as well as any additional standards the regulator may occasionally specify.
Given that SEBI-regulated intermediaries would be supplying the platforms, the move will also increase investor confidence, particularly the noninstitutional investors.
Anyone operating an online bond platform without a registration certificate, before the date of this regulation coming into effect may do so for a period of three months.

The number of OBPPs that offer debt securities to noninstitutional investors has increased during the last few years.
The majority of them are Fintech companies or are supported by stock brokers.
Further, there has been a significant increase in the number of registered users who have transacted through them.
While OBPs provide an avenue for investors, particularly noninstitutional investors to access the bond market, their operations were outside SEBI's regulatory purview.
The bond market offers tremendous scope for development, particularly in the non-institutional space.
Hence, there is a need to place checks and balances in the form of transparency in operations and disclosures to the investors dealing with such Online Bond Platforms (OBPs).

A bond market is the collective term for all trades and issues of debt securities.
Governments issue bond generally to raise capital to pay down debts or fund infrastructural improvements while Publicly traded companies issue bonds to finance business expansion projects or maintain ongoing operations.

As per regulator an online bond platform as any electronic system, other than a recognised stock exchange or an electronic book provider platform, on which the debt securities which are listed or proposed to be listed, are offered and transacted.
Further, online bond platform provider means any person operating or providing such a platform.