Sebi Chief supports the unified corp bond trading platform
MUMBAI: to deepen the country bond market , which can serve as a solid alternative to bank financing for capital, Sebi wants the corporate bond market , which is fairly illiquid, to be unified with the government securities market, which is relatively much more liquid. On Wednesday, Sebi chairman Ajay Tyagi said that such a move would make it easier for investors to enter and exit the bond market .
The top regulator is also trying to shorten the time between the issuance of corporate bonds and your listing at six days from 12 days now. In comparison, in the stock market, shares sold through an initial public offering are traded three days after the close of the offer.
"There is a need for seamless transmission of information from G-secs to the corporate bond market ...there is a need for unification of both," Tyagi said in his inaugural address at an event organised by the industry body Assocham . Under such a unified system, trade, clearing and settlement can take place on a platform backed by an ecosystem that allows the smooth transfer of G-sec and corporate bond holdings, he said.
Sebi chairman also wants the cost of issuance of bonds to come down, which he feels is very high now. He said that creating a debenture redemption reserve (DRR) for issuance of bonds increases costs by 20-50%. The recent government announcement to remove DRR would, in all likelihood, substantially bring down the cost of issuance for issuers, Tyagi said. According to him, another way to lower the cost is to shift the payments to unified payment interface .
The Sebi chief also said that there was need for issuers in the corporate bond market to be innovative with products and currently only 'vanilla' products are offered. During his post-speech interaction with the media, Tyagi said that the regulator was in the process of setting up a working group which will look into the issues relating to starting a social stock exchange, which was announced in the Budget.