The Securities and Exchange Board of India (Sebi) has put forward a proposal requiring Foreign Portfolio Investors (FPIs) to conduct a minimum of 10 percent of their total secondary market transactions in corporate bonds by value on the Request For Quote (RFQ) platform of the stock exchanges.
The primary objective of this proposal is to boost liquidity on the RFQ platform and improve transparency and disclosure related to investments in corporate bonds. Sebi believes that these measures will encourage FPIs to invest more in the corporate bond segment.
The RFQ platform, introduced by the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) in February 2020, is an electronic platform that facilitates centralized online trading, enabling multi-lateral negotiations and seamless clearing and settlement processes.
A diverse range of debt securities are available for trading on the RFQ platform.
According to the consultation paper released by Sebi, the proposal suggests that FPIs should be mandated to quote on the RFQ platform of stock exchanges for at least 10 percent of their total secondary market trades in corporate bonds by value on a quarterly basis, initially.
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