Corporate bonds

Portfolio Management Services will transact 10% on corporate bonds through a quote request platform: SEBI

The new framework, which will come into effect from April 1, 2022, will also increase liquidity on the exchange, the Securities and Exchange Board of India said.

To improve the transparency of debt investments by portfolio management services in corporate bonds, Sebi said on Thursday that PMS will have to conduct at least 10% of its transactions through the quote request platform.

The new framework, which will come into effect from April 1, 2022, will also increase liquidity on the exchange, the Securities and Exchange Board of India (Sebi) said in a circular.

“On a monthly basis, PMS must undertake at least 10% of their total secondary market transactions by value in corporate bonds (CBs) during that month by placing/seeking quotes through one to one (OTO) or one-to-one multiple mode (OTM) on the Exchange Request for Quotation (RFQ) platform,” Sebi said.

To ensure compliance with the requirement, PMS will have to consider trades executed in value via the OTO or OTM mode of RFQ for the total trades in the secondary market for corporate bonds, during the current month and the two previous months. on an ongoing basis.

All trades in corporate bonds where PMS is on both sides of the trade must be executed via RFQ in OTO mode.

However, any transaction entered by PMS on corporate bonds in OTM mode, which is executed with another PMS, will be recorded in OTM mode.

PMS is authorized to accept trade confirmations from securities brokers for trades made in OTO and OTM modes of RFQ.

Accordingly, from April 2022, PMS will need to ensure that at least 10% (by value) of their OC secondary market transactions in the current month and the two immediately preceding months – February 2022, March 2022 and April 2022 – be executed by placing or searching quotes via RFQ’s OTO or OTM mode.

Additionally, for May 2022, secondary market trades executed on corporate bonds in March 2022, April 2022 and May 2022 will be considered for the calculation.

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