Corporate bonds

Sebi streamlines centralized database framework for corporate bonds

Market regulator Sebi on Friday streamlined the centralized database framework for corporate bonds to further facilitate access to information for investors.

By virtue of this, he provided an updated list of which data fields to keep in the database as well as how to classify them, Sebi said in a circular.

The regulator also clarified the responsibilities of the parties involved, the content of the database and how to submit the information.

In October 2013, the regulator mandated depositaries to jointly create, host and maintain a centralized database of corporate bonds held in the form of demat.

“Following discussions with market players, it was decided to further streamline the database and provide greater ease of access to information for investors,” said Sebi.

This new framework will be applicable to debt securities issued from August 1, 2021.

Regarding custodians, Sebi said they should continue to jointly create, host, maintain and disseminate the centralized database of corporate bonds held in the form of demat.

All historical data available in the database will continue to be hosted by the custodians.

They must ensure that they have adequate systems and guarantees to maintain the integrity of the data and prevent their manipulation. Each custodian will have to synchronize the database in consultation with the other custodians.

The custodian that receives information from one sender must host it as well as share it with the other custodian for hosting within three working days from the date of receipt of the information.

In addition, they will need to provide secure login credentials to issuers, exchanges, rating agencies and bond trustees to update and verify the required information in the corporate bond database within the required time frame. .

In addition, custodians should provide the available information regarding redeemable preferred shares and securitized debt securities, in a separate section of the database, in the form available with them, after sharing it with the other custodian for synchronization. and update the data.

Regarding issuers, Sebi said they will need to provide details regarding the issuer, the issue, the classification of the instrument and its details, the credit rating with the name of the rating agency and the date of the credit rating and information on the history of defaults, among others, in the database at the time of allocation of the ISIN.

In addition, depositaries should verify the information provided by the issuer when activating the ISIN (International Securities Identification Number).

The ISIN code, which is 12 characters long, is used to uniquely identify securities such as stocks, bond warrants and commercial papers.

After the securities have been listed, issuers will be required to submit information on listing details, a “stock exchange listing notification” hyperlink or final approval hyperlink, registration date details, credit rating , payment status and information on the history of defaults on any of the exchanges where their securities are listed on a periodic and / or “as and when” basis.

The exchange should indicate the filing format to issuers in this regard.

Regarding exchanges, Sebi said that exchanges and custodians will need to develop a system such that the information they receive is updated daily in the centralized database.

In addition, exchanges will need to verify listing details provided by the issuer at the time of ISIN allocation as well as after listing.

In addition, they must update periodic and event-based information in the database as it is received from transmitters.

In the case of credit rating agencies (CRAs), Sebi said rating agencies will have access to the database to verify rating information uploaded by the issuer.

If there is any discrepancy, the rating agencies should notify the exchanges and update the correct information in the database within the allotted time.

Sebi said the debenture trustees will have access to the database to verify information regarding the default history and other relevant information.

In the event of a discrepancy, he must inform the exchanges and update the correct information in the database, within the allotted time.

Regarding timelines, Sebi said rating agencies should verify and update information on subsequent rating migrations in the database within one business day of the press release.

When verifying the initial rating information provided by the issuer in relation to the ISINs of the instruments, the regulator said that rating agencies should update them within three business days if there is any variation.

In addition, the Debenture Trustees will be responsible for verifying and updating the default history information regarding the Instrument / Issuer, as applicable in the database, within seven days of becoming aware of the fault.