SEBI Ponders Market Makers to Deepen Corporate Bond Segment: Current Affairs Special Series

Team Adda247 and BankersAdda are here with a Current Affairs Special Series. In this series, candidates will be introduced to current affairs topics daily, which will not only improve their general awareness but also will ensure that the candidates do not lack in any current affairs topic. Today’s Current Affairs topic is SEBI Ponders Market Makers to Deepen Corporate Bond Segment

SEBI Ponders Market Makers to Deepen Corporate Bond Segment

Securities and Exchange Board of India (SEBI) is thinking of the creation of a set of “market makers” to develop and strengthen the corporate bond segment. These entities are putting quotation marks on the buy and selling price of corporate bonds to create liquidity in the secondary market for such bonds.

Security regulator, SEBI is going to launch the sensory system for setting up a backstop facility for buying corporate bonds. Even SEBI is also thinking over to revamp the corporate bond database which is accessible to all investors. According to SEBI, this database will make available at ground level information about debts to investors in the debt market. SEBI is focusing on the creation of a vibrant secondary market for investment-grade corporate bonds which is being acutely conscious of the need for diversification of sources for financing the infrastructure needs of the country.

The regulator has calculated several measures in the past recently to ease liquidity in the secondary market. SEBI is searching out appropriate eligibility criteria for such market makers to ensure that financially sound entities with the requisite expertise are encouraged to participate. Concern about the backstop facility, SEBI is in the final process of the sensory system to set up the facility along with other stakeholders which include the Ministry of Finance and the mutual fund industry.

 The Union Budget for 2021-22, concern with the creation of a backstop facility that would purchase investment-class debt securities both in stressed and normal times, and it will help the development of the bond market. The concern was based on a proposal from SEBI which layered out that the backstop facility would function as an entity on standby and is imagined to facilitate liquidity in the corporate bond market and to answer quickly to emphasis situations, similar to the mechanisms available in developed markets globally. 

The regulator is looking to enhance the continuous listing requirement for debt-listed entities to improve the granularity of disclosures relating to financials, material events including credit events, corporate governance-related disclosures including related party transactions.