The (SEBI) has proposed a series of changes to the regulatory framework governing Online Bond Platform Providers (OBPPs), including allowing them to offer products regulated by the International Financial Services Centres Authority, thereby enabling access to overseas-listed debt securities through the Gujarat International Finance Tec-City (GIFT-IFSC).
Currently, OBPPs can only distribute products regulated by domestic financial regulators such as SEBI, the Reserve Bank of India and others. SEBI said the move would align OBPPs with stockbrokers, who are permitted to operate in IFSCs.
In a consultation paper released on Tuesday, the regulator has sought public comments by May 26 on three key proposals that aim at widening product offerings, streamlining compliance requirements, and improving ease of doing business in the fast-growing retail bond market.
The regulator has also proposed permitting OBPPs to offer tax-saving bonds issued under Section 54EC of the Income Tax Act, as well as similar provisions under the new Income-tax Act.
These bonds, issued by government-backed entities such as Power Finance Corporation Ltd, Indian Railway Finance Corporation Ltd and REC Ltd, are currently exempt from mandatory listing requirements, creating ambiguity over their eligibility on bond platforms.
SEBI has proposed allowing their distribution with appropriate disclosures on features such as lock-in periods, investment limits and tax benefits, along with clear disclaimers that investor grievances will lie with the issuer and not the regulator.
In a move aimed at regulatory harmonisation, SEBI has also suggested revising norms for appointment of compliance officers by OBPPs. At present, such platforms are required to appoint a company secretary as compliance officer. The regulator now proposes aligning this requirement with stockbroker regulations, which do not mandate a specific professional qualification, following representations from industry bodies, including the Institute of Chartered Accountants of India.
SEBI said the proposed changes are based on recommendations of its advisory committee and feedback from stakeholders, as well as an internal review of the OBPP ecosystem. The regulator noted that the reforms are intended to remove operational ambiguities while expanding investment avenues for retail participants in the bond market.