Sebi allows stock brokers to place client bids on RFQ platform from Jan 1

Stock brokers registered under the debt segment of the stock exchanges will be able to place bids on the Request for Quote (RFQ) platform on behalf of their clients from January 1, 2023, the Securities and Exchange Board of India (Sebi) announced. This facility will be in addition to the existing option of placing bids in a proprietary capacity.

The markets regulator expects that the new norm will enhance participation by the public, along with helping in deepening the secondary market on the corporate bonds side. At present, the share of RFQ trades in total trades in the bond market stands at around 30 per cent.

“Sebi has been receiving representations from the market participants to permit stock brokers to place bids on behalf of their clients, to facilitate wider market participation in the corporate bond market. Hence, it has been decided to allow stock brokers to place bids on the RFQ platform,” the regulator said in a statement.

Sebi has directed the stock exchanges to put in place the necessary infrastructure for access and use of the platform by stock brokers in its circular issued on Wednesday.

The RFQ platform enables multilateral negotiations on a centralised online trading platform with straight through processing of clearing and settlement to complete trades. The stock exchanges launched the platform in February 2020 to bring transparency in over the counter deals.

Non-convertible securities, securitised debt instruments, municipal debt securities, commercial papers, certificate of deposit, government securities, state development loans, and treasury bills can be traded on the platform. 

In efforts to enhance the participation and liquidity on the RFQ platform, mutual funds and portfolio management services are mandated to undertake a specified percentage of their total secondary market trades in corporate bonds through this platform.