Stop Selling Unlisted Securities: SEBI to Online Bond Platforms
Moneylife Digital Team 19 June 2023
Market regulator Securities and Exchange Board of India (SEBI) has asked online bond platforms (OBPs) not to sell unlisted securities from their platforms. At the same time, SEBI, while revising Clause 5.2 of the OBP circular, decided to include a few new product categories, such as government securities and listed sovereign gold bonds.
 
In the circular, SEBI says, "It is reiterated that an entity acting as an OBP provider shall cease to offer on its online bond platform or any other platform or website products or services not permitted under clause 5.2 of the OBP circular."
 
The market regulator says it observed that certain OBPs offer products other than listed debt securities and debt securities proposed to be listed through a public offering on their platform. Certain OBP-providers are offering unlisted bonds and other products on a separate platform or website and have not divested such offerings in terms of clause 5.2 of the OBP circular. Further, certain OBP-providers have a link on their platform or website to another platform or website for transacting in unlisted bonds and other products. 
 
"These practices are not as per the mandate provided in the SEBI (issue and listing of non-convertible securities) regulations (NCS Regulations), and the OBP circular," SEBI says.
 
Explaining restrictions on OBPs, the market regulator reiterates that an entity acting as an OBP-provider should divest itself of offerings of other products or securities or services.
 
"A holding company, subsidiary or associate of an OBP provider or any third party shall not utilise the name, brand name or any name resembling that of the OBP provider or the OBP for undertaking any activity or offering products or securities or services (including offering of unlisted securities) that are not regulated by a financial sector regulator like SEBI, Reserve Bank of India (RBI), Insurance Regulatory and Developmental Authority of India (IRDAI), or Pension Fund Regulatory and Development Authority (PFRDA)," it added.
 
SEBI also restricted OBPs from placing any link or tab on the platform to websites or platforms of its holding company, subsidiary or associate, undertaking any activity or offering products and securities or services not regulated by any financial sector regulator. 
 
Similarly, a holding company, subsidiary or associate of OBP cannot access or receive any information about a user of the OBP nor cross-sell products and securities or services to a user of the OBP.
 
Following representations from OBPs, SEBI says it decided to permit them to allow certain other securities on their platforms. It includes listed debt securities, listed municipal debt securities and listed securitised debt instruments; debt securities, municipal debt securities and securitised debt instruments proposed to be listed through a public offering; listed government securities, state development loans and treasury bills; and listed sovereign gold bonds.
Comments
ArrayArray
Free Helpline
Legal Credit
Feedback