SEBI Issues Guidelines On Product Offerings By Online Bond Platform Providers
Recently the Securities and Exchange Board of India (SEBI) has issued guidelines on offering of products by Online Bond Platform Providers (OBPPs).
- SEBI has prohibited OBPPs from offering products other than listed debt securities on their platform.
- SEBI has permitted them to offer securities like Government Securities, Treasury Bills, Listed Sovereign Gold Bonds.
- OBPPs have to get themselves registered as stock brokers in the debt segment of the stock exchange. The holding company, subsidiary or associate company of OBPPs shall neither use the brand name nor offer unregulated products. SEBI has defined Online Bond Platform (OBP) as an electronic system other than a recognized stock exchange.
- Debt securities (which are listed or proposed to be listed) are offered and traded on this system. For example, Bonds India, Golden Pi etc.
- A person who provides or operates such a platform is called an OBPP. Bond is a debt instrument, which provides debt for a long period of time. Under a bond, the investor typically lends money to a corporate or government.
- In this, the corporate or government borrows money at a variable or fixed rate of interest for a specified period. Bonds are used by companies, municipalities, states and sovereign governments to raise money.
Types of Bond:
- Fixed-rate bond: The interest rate remains constant throughout the term of the bond.
- Floating-rate bonds: The interest rate (coupon) in these bonds fluctuates according to the current market reference rate.
- Zero-coupon bond: It does not pay any regular interest to investors and issuers. Bond holders are paid only the principal amount.
Source – Business Standard
