SEBI has issued a circular classifying the Corporate Debt Market Development Fund (CDMDF) as a Category I Alternative Investment Fund (AIF) under Regulation 3(4)(a) of the SEBI (Alternative Investment Funds) Regulations, 2012. The CDMDF was established under Chapter III-C of the AIF Regulations as a backstop facility to purchase investment-grade corporate debt securities during periods of market stress. This measure aims to bolster confidence among participants in the corporate debt market and improve secondary market liquidity through a permanent institutional mechanism activated during financial stress. SEBI clarified this classification following representations seeking clarity on CDMDF’s categorization within the AIF framework. The circular, issued under Section 11(1) of the SEBI Act, 1992, and Regulation 36 of the AIF Regulations, is designed to protect investor interests and support the development and regulation of the securities market.
Securities and Exchange Board of India
Circular No. SEBI/HO/IMD/PoD2/P/CIR/2024/174 Dated: December 13, 2024
Asset Management Companies (AMCs)/
Trustee Companies/ Board of Trustees of Mutual Funds/Trustee Company of CDMDF/
Association of Mutual Funds in India (AMFI)
Sir / Madam,
Subject: Classification of Corporate Debt Market Development Fund (CDMDF) as Category I Alternative Investment Fund
1. Corporate Debt Market Development Fund (hereinafter referred to as ‘CDMDF’ or ‘the fund’) has been set-up under Chapter III-C of SEBI (Alternative Investment Funds) Regulations, 2012 (AIF Regulations) to act as a Backstop Facility for purchase of investment grade corporate debt securities, to instill confidence amongst the participants in the Corporate Debt Market during times of stress and to generally enhance secondary market liquidity by creating a permanent institutional framework for activation in times of market stress.
2. In this regard, SEBI had received representation to provide clarity on classification of CDMDF under one of the defined categories under the AIF Regulations.
3. While a separate framework has been laid down for CDMDF under chapter III-C of Regulation 19 of AIF Regulations, the fund has been set-up with the broader economic objective of development of corporate bond market, inter-alia, to act as a Backstop facility during times of market stress. In view of the above, it is clarified that CDMDF falls under Category I AIF in terms of Regulation 3(4)(a) of AIF Regulations.
4. This circular is issued in exercise of powers conferred under Section 11 (1) of the Securities and Exchange Board of India Act, 1992, read with the provisions of Regulation 36 of AIF Regulations, to protect the interest of investors in securities and to promote the development of, and to regulate the securities market.
5. This Circular is available at sebi.gov.in under the link “Legal > Circulars”.
Yours faithfully,
Peter Mardi
Deputy General Manager
Investment Management Department
Tel no.: 022-26449233
Email: peterm@sebi.gov.in
