The Securities and Exchange Board of India (SEBI) has released a consultation paper reviewing the Electronic Book Provider (EBP) Platform for primary debt issuances and the Request for Quote (RFQ) Platform for secondary market trading. SEBI aims to enhance transparency, price discovery, and efficiency in the corporate bond market.
The EBP Platform, introduced in 2016, ensures fair price discovery for privately placed debt securities. SEBI is considering expanding its scope to all debt issuances, including municipal bonds and securitized debt instruments. A working group of industry experts has submitted recommendations to improve the platform’s functionality and remove inefficiencies.
The RFQ Platform, launched in 2020, facilitates electronic trading of corporate bonds. SEBI proposes modifications to improve liquidity and participation, including changes to contract note generation and regulatory requirements for foreign and domestic funds. A separate working group has analyzed operational challenges and proposed solutions.
SEBI seeks public comments on these proposed revisions. Stakeholders, including investors, issuers, and market participants, are encouraged to submit their views via the SEBI online public comment portal by April 10, 2025. Feedback will help shape regulatory changes for better market functioning.
Securities and Exchange Board of India
CONSULTATION PAPER
DEPARTMENT OF DEBT AND HYBRID SECURITIES
Consultation paper on review of provisions pertaining to Electronic Book Provider (EBP) Platform and Request For Quote (RFQ) Platform
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Preface
Debt: Primary Issuances (EBP)
1. Over the past several years, various measures have been taken by SEBI, for developing the corporate bond market. Earlier, the price discovery for issue of privately placed debt securities was being done either over the telephone among identified investors and issuers with the help of arrangers or by physical bids sent to the issuer by investors or by submitting individual bids on the portal provided by the issuer. These methods were opaque since most of the investors were brought in by the arranger(s) appointed by the issuer and there were hardly investors directly approaching the issuer. This resulted in many market malfunctioning like poor price discovery, arrangers taking a significant portion of the issue on their books and down-selling it without disclosing the price at which the securities were bought.
2. Keeping in view these issues and challenges, in April 2016 SEBI stipulated a framework for an electronic book mechanism (EBM) for issuing of debt securities on a private placement basis in order to streamline procedures for issuing debt securities on a private placement basis and thereby enhancing transparency in discovering prices. Accordingly, from July 01, 2016, NSE and BSE started their operations as electronic book providers (EBPs).
3. Based on the feedback received from the stakeholders, the framework was suitably revised vide SEBI circulars dated August 16, 2016 and January 5, 2018 to further rationalize and ease the process of issuance of securities through the EBP platform.
4. The provisions of the said circulars were subsumed into Chapter VI of the Operational Circular no. SEBI/HO/DDHS/P/CIR/2021/613 dated August 10, 2021, under the SEBI (Issue and Listing of Non-convertible securities) Regulations, 2021. The aforementioned circular inter-alia stipulates the issuances which have to necessarily be made through EBP, the eligible participants, obligations/ responsibilities of various entities, provision to issuer to withdraw offer, process of bidding and allotment, etc. It inter alia requires all primary issuances (fresh or reissuance) of privately placed listed corporate bonds, above INR 50 cr. to be bid through EBP platform provided by stock exchanges.
Debt: Secondary market (RFQ)
1. In February 2020, pursuant to approvals from SEBI, both National Stock Exchange of India Limited and BSE Limited launched Request for Quote (RFQ) platforms, as an extension of their existing trade execution and settlement platforms, to bring in transparency in “Over the Counter” deals in corporate bonds which were negotiated bilaterally.
2. RFQ Platform was created with the goal of transforming corporate bond market trading from traditional OTC based to an electronic trading platform. RFQ is an electronic platform to enable sophisticated, multi-lateral negotiations to take place on a centralized online trading platform with straight-through-processing of clearing and settlement to complete a trade.
3. RFQ platform was developed by BSE and NSE to act as a single interface for price givers as well as price takers in corporate bond market from a diverse range of clients for better price discovery. RFQ using request for quote protocol provides participants a range of options to seek a quote and to respond to a quote, while keeping an audit trail of all interactions i.e. quoted yield, mutually agreed price, deal terms etc. A participant may request other participants for a quote for eligible securities.
4. Initially, RFQ platform only allowed access to institutional participants including all regulated entities, listed corporates, Institutional Investors as defined under SEBI ICDR Regulations, 2018 and All India Financial Institutions. With SEBI’s circular permitting participation through brokers from 01 Jan 2023, all types of participants including retail are now allowed to access RFQ Platform by using the services of brokers in the debt segment including OBPs.
5. Part A of this consultation paper suggest various proposals regarding EBP, Part B of this consultation paper suggest various proposals regarding RFQ, to enhance their efficacy and greater transparency.
6. SEBI invites feedback from the public on the proposals outlined in this Consultation Paper.
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PART A- Review of provisions pertaining to Electronic Book Provider (EBP) Platform
OBJECTIVE:
1. In order to enhance efficacy of the EBP platform, it is felt essential to review the provisions pertaining to EBP Platform along the requirements with the changing market dynamics.
2. Accordingly, a working group was set up, comprising of the following members:
- Radha Kirthivasan, BSE – Head Listing & SME (Chair of the Working Group)
- Santosh Potlacheru, NSE
- Darshita Shah, Axis Bank Limited
- Shameek Ray, ICICI Securities Primary Dealership Ltd.
- Bharti Bhambwani, Trust Investment Advisors Private Limited
- Rakhi Dua, Indian Railway Finance Corporation Limited (IRFCL)
- Hemen Shah, Bajaj Finance Ltd
- Vidyanand Joshi, SBI Pension fund
- Anil Bamboli, HDFC Mutual Fund
- Rajesh Kumar Chakrapani, Standard Chartered Bank (Singapore) Limited
- Ramesh Ramanathan, International Finance Corporation (IFC)
3. The working group was given the following Terms of Reference (ToR):
i. Explore whether EBP platform can be made mandatory for all size of issuances of debt securities and NCRPS,
ii. Explore whether EBP platform can be extended for issuances of municipal debt securities, securitized debt instruments and INVITs issued on private placement basis,
iii. Analysis and evaluation of the existing process flows to identify the bottlenecks that hinder participation and operational efficiency of the Platform, and
iv. Other aspects incidental to the work of working group.
4. The Working Group undertook a comprehensive review and submitted its report on January 17, 2025. Report submitted by the working group is placed at Annexure-D.
PART B- Review of the Request For Quote (RFQ) Platform
OBJECTIVE:
5. To further improve liquidity and price discovery mechanism, it is felt essential to review the provisions pertaining to RFQ Platform to align the requirements with the changing market dynamics.
6. Accordingly, a working group was set up, comprising of the following:
- Amit Tripathi, Nippon India Mutual Fund (Chair of the Working Group)
- Ritesh Tatiya, ICICI Bank
- Badrish Kulhalli, HDFC Life Insurace Company Limited
- Anshul Agarwal, Wint Wealth (OBPP)
- Bhavin Savla, Barclays (FPI)
- Elwin Jose, NSE
- Aakshat Sharma, BSE
7. The working group were given the following terms of reference:
i. Analysis of the existing process flows to identify the bottlenecks that hinder liquidity;
ii. Evaluation of operational aspects including generation of contract notes on RFQ platform, difference in requirements related to Permanent Account Number (PAN) for foreign asset managers and domestic Funds;
iii. Suggest Measures to boost liquidity and enhance transparency and price discovery mechanism; and
iv. Other suggestions, if any
8. Report submitted by the working group is placed at Annexure-E.
9. In respect of the recommendations of the working group pertaining to the operational aspects of the RFQ platform, Stock Exchanges in consultation with SEBI may issue their respective guidelines dealing with the operational aspects of the RFQ platform whereas in respect of the recommendations of the working group requiring regulatory interventions, relevant circulars shall be issued by SEBI separately.
10. Public Comments
10.1. This consultation paper proposes to solicit comments/ views/ suggestions from the public on the following:
Part A – Review of provisions pertaining to Electronic Book Provider (EBP) Platform
i) Draft circular titled “Review of provisions pertaining to Electronic Book Provider Platform” placed at Annexure –
ii) In addition to the existing basis of allocation, at the option of the issuer, whether it would be appropriate to remove ‘time’ from ‘price time priority’ and ‘yield time priority’ in basis of allotment. An illustration showing impact on allotment in case of ‘uniform yield allotment’ and ‘multiple yield allotment’, where coupon is specified by the issuer (i.e. bids are arranged as per ‘price time priority’) is placed as Annexure-B. In case your response is ‘YES’, kindly specify the following:
(1) For uniform yield allotment, whether proportionate allotment should be done at (i) cut-off (Case 1.a of illustration) OR at and above cut-off (Case 1.b of illustration)
(2) For multiple yield allotment, whether proportionate allotment should be done at cut-off (Case 2 of illustration)
Part B- Review of the Request For Quote (RFQ) Platform
iii) Draft circular titled “Simplification of the operational process relating to yield to price computation on the Request for Quote (RFQ) Platform and Disclosure of cash flow regarding payment of interest/ dividend/ redemption in the centralized corporate bond database” placed at Annexure –C.
10.2. The comments/ suggestions should be submitted through the following mode latest by April 10, 2025 :
10.2.1. Preferably through Online web-based form
10.2.1.1. The comments may be submitted through the following link:
CONSULTATION PAPER
https://www.sebi.gov.in/sebiweb/publiccommentv2/Public Comment Action.do?doPublicComments=yes
10.2.1.2. The instructions to submit comments on the consultation paper are as under:
| 1. Before initiating the process, please read the instructions given on top left of the web form as “Instructions”.
2. Select the consultation paper you want to comment upon from the dropdown under the tab – “Consultation Paper” after entering the requisite information in the form. 3. All fields in the form are mandatory; 4. Email Id and phone number cannot be used more than once for providing comments on a particular consultation paper. 5. If you represent any organization other than the types mentioned under dropdown in “Organization Type”, please select “Others” and mention the type, which suits you best. Similarly, if you do not represent any organization, you may select “Others” and mention “Not Applicable” in the text box. 6. There will be a dropdown of Proposals in the form. Please select the proposals one- by-one and for each of the proposal, please record your level of agreement with the selected proposal. Please note that submission of agreement level is mandatory. 7. If you want to provide your comments for the selected proposal, please select “Yes” from the dropdown under “Do you want to comment on the proposal” and use the text boxes provided for the same. 8. After recording your response to the proposal, click on “Submit” button. System will save your response to the selected proposal and prompt you to record your response for the next proposal. Please follow this procedure for all the proposals given in the dropdown. 9. If you do not want to react on any proposal, please select that proposal from the dropdown and click on “Skip this proposal” and move to the next proposal. 10. After recording your response to all the proposals, you may see your draft response to all of proposals by clicking on “Check your response before submitting” just before submitting response to the last proposal in the dropdown. A pdf copy of the response can also be downloaded from the link given in right bottom of the web page. 11. The final comments shall be submitted only after recording your response on all of the proposals in the consultation paper |
10.2.1.3. In case of any technical issue in submitting your comment regarding consultation paper on review of provisions pertaining to Electronic Book Provider (EBP) Platform and Request For Quote (RFQ) Platform through web based public comments form, you may contact the following through email with a subject: “Consultation paper on review of provisions pertaining to Electronic Book Provider (EBP) Platform and Request For Quote (RFQ) Platform “.
a. Mr. Rohit Dubey, GM (rohitd@sebi.gov.in)
b. Mr. Appin Gothwal, AGM (apping@sebi.gov.in)
c. Ms. Kiran Dhembre, AM (kirand@sebi.gov.in)
Issued on: March 20, 2025
