Sebi forms panel on corporate bond market

Market regulator the Securities and Exchange Board of India (Sebi) today constituted a 16-member committee which will suggest a roadmap for developing corporate bond market in the country.

The 'Corporate Bonds & Securitisation Advisory Committee' would be chaired by RH Patil, chairman of Clearing Corporation of India (CCIL), the regulator said in a statement.

The committee, which includes representatives from the Sebi, RBI and independent experts, would advise the regulator on development of corporate bond market and the market for securitised instruments in the country.

Members of the committee include Nimesh N Kampani (Chairman, JM Financial), Rajiv Lall (MD & CEO, IDFC), Chitra Ramakrisha (Joint MD, NSE) and B Prasanna (MD & CEO, ICICI Securities- PD), among others.

The committee would "advise Sebi on implementing the recommendations of the high-level committee on corporate bonds and securitisation", it said.

It would also suggest removal of regulatory hurdles and advise on issues which need to be taken up with other regulators as also highlight the operational and systemic risks, if any, in the corporate bonds and securitised instruments market.

"This would help make the corporate bond and securitisation market more active and dynamic," SMC Global Securities Strategist & Head of Research Jagannadham Thunuguntla said.

Pursuant to the announcement made in the Union Budget, 2005-06, the government had appointed a 'High Level Expert Committee' on corporate bonds and securitisation.

The committee was appointed to examine legal, regulatory, tax and market design issues in the development of the corporate bond market.

The committee's recommendations included enhancing the issuer as well as investor base of corporate bonds, simplification of listing and disclosure norms, rationalisation of stamp duty and withholding tax and consolidation of debt.

The committee had also suggested improving trading system through introduction of an electronic order matching system, efficient clearing and settlement systems, a comprehensive reporting mechanism, developing market conventions and self-regulation and development of the securitised debt market.

Earlier this month, the Sebi allowed listing of securitised debt instruments or certificates on exchanges, and said that the move would help improve the secondary market liquidity for such instruments.

Securitisation involves pooling of financial assets and the issuance of securities that are re-paid from the cash flows generated by these assets.

Common assets for securitisation include credit cards, mortgages, auto and consumer loans, student loans, corporate debt, export receivable and offshore remittances.