Introduction: The Securities and Exchange Board of India (SEBI) has recently released Circular No. SEBI/HO/DDHS/DDHS-POD2/P/CIR/2023/151 dated September 4, 2023. This circular addresses the mechanism for the sharing of information by Credit Rating Agencies (CRAs) to Debenture Trustees (DTs). The aim is to enhance the efficiency and accessibility of data sharing while ensuring compliance with the SEBI (Credit Rating Agencies) Regulations, 1999.
Key Points of the Circular:
I. Regulatory Requirement: The circular emphasizes the existing requirement for CRAs to share specific information with DTs, as stipulated by the SEBI (Credit Rating Agencies) Regulations, 1999 and related circulars.
II. Structured Data Sharing: Due to the substantial volume of data submitted by CRAs to DTs on a daily basis, along with the tight timelines for disclosure, the circular underscores the need for structured and specified format data sharing. This format ensures easy accessibility and analysis of the information submitted by CRAs.
III. Excel Template: Following consultations with CRAs and DTs, an Excel template is provided as an annexure to the circular. CRAs are required to utilize this template for their daily submissions of rating revisions to DTs.
IV. Submission Process: CRAs are instructed to send their submissions to DTs on the same day as the rating revisions. Submissions can be made via the generic email ID designated for regulatory purposes or through email IDs/URLs as communicated by DTs for this specific purpose.
V. Applicability and Reporting: The circular becomes effective from October 1, 2023. CRAs are required to ensure compliance with this circular and report their adherence to SEBI within one quarter from the circular’s applicability date. Such reporting should be endorsed by the respective board of directors.
VI. Monitoring and Audit: SEBI will monitor the implementation of this circular through the half-yearly internal audit procedure mandated for CRAs under Regulation 22 of the CRA Regulations and related circulars.
VII. Regulatory Authority: The circular is issued with the approval of the competent authority, in exercise of the powers conferred by Section 11(1) of the Securities and Exchange Board of India Act, 1992. The circular aims to safeguard the interests of securities investors, promote market development, and regulate the securities market.
Conclusion: SEBI’s circular provides a comprehensive framework for CRAs to share information with DTs in a structured manner, thereby enhancing efficiency and compliance. The prescribed Excel template and submission process streamline the information flow, benefiting both CRAs and DTs while aligning with SEBI’s regulatory objectives. The circular’s emphasis on reporting and monitoring ensures transparency and accountability, contributing to the overall integrity of the securities market.
Securities and Exchange Board of India
Circular No. SEBI/HO/DDHS/DDHS-POD2/P/CIR/2023/ 151 Dated: September 04, 2023
All Registered Credit Rating Agencies (CRAs),
All Registered Debenture Trustees,
Dear Sir/ Madam,
Sub: Mechanism for Sharing of Information by Credit Rating Agencies (CRAs) to Debenture Trustees (DTs)
I. SEBI (Credit Rating Agencies) Regulations, 1999 (“CRA Regulations”) and circulars issued thereunder require sharing of certain information from CRAs to Debenture Trustees (DTs).
II. Due to the large quantum of information submitted daily by CRAs to DTs, as well as short timelines mandated for disclosure of this information by DTs, it is essential that the data shared by CRAs be structured and submitted in a specified format for easier accessibility and analysis of the submitted data.
III. Accordingly, based on discussion with CRAs and DTs, an excel template is placed as Annexure. CRAs shall use the same template for their daily submissions of rating revisions to DTs.
IV. Such submissions shall be sent by CRAs to DTs on the same day as the day of rating revisions, on either the generic email ID being used for regulatory purposes, or email IDs/URL as may be communicated for this purpose by DTs.
V. Applicability: The circular shall be applicable with effect from October 01, 2023, and CRAs shall report on their compliance with this circular (as ratified by their respective board of directors) to SEBI within one quarter from the date of applicability of this circular.
VI. Monitoring: Monitoring of this circular shall be done in terms of the half-yearly internal audit for CRAs, mandated under Regulation 22 of the CRA Regulations and circulars issued thereunder.
VII. This circular is issued with the approval of competent authority, in exercise of the powers conferred by Section 11 (1) of Securities and Exchange Board of India Act, 1992 read with the provisions of Regulation 20 of CRA Regulations to protect the interest of investors in securities and to promote the development of, and to regulate, the securities market.
Deputy General Manager
Department of Debt and Hybrid Securities
Email ID – email@example.com