Sebi proposes periodic disclosure mandate for securitised debt issuers

Sebi on Monday floated a consultation paper mandating special purpose distinct entities and their trustees to submit detailed half-yearly disclosures on securitised debt instruments to the regulator and stock exchanges.

The move is part of Sebi's efforts to improve transparency and investor protection in the securitisation market.

The proposed circular mandates that SPDIs and their trustees furnish detailed disclosures on a half-yearly basis to Sebi and stock exchanges, where SDIs are listed, within 21 days from the end of March and September.

These disclosures will cover the performance, structure, and credit quality of underlying assets supporting securitised instruments.

According to the draft guidelines, disclosures would differ based on the nature of the securitised assets. For SDIs backed by loans, listed debt securities or credit facilities, the trustees must report data on asset maturity profiles, overdue exposures, prepayment rates, recovery actions, loan-to-value ratios, and expected credit losses.

A separate format is proposed for SDIs backed by other asset types.

The markets watchdog has also called for detailed information on credit enhancements, liquidity support, and material events affecting the creditworthiness of obligors or the servicing of receivables.

Trustees are required to report any amendments made post-securitisation to loan terms or documentation and provide updates on the industry and geographical distribution of asset pools.

The disclosure formats aim to support automated supervision and automated processing of data, Sebi said, in alignment with its regulatory push for greater data transparency and market discipline in line with the Reserve Bank of India's revised securitisation framework.

The consultation paper stems from a review undertaken by a Sebi's working group tasked with aligning the Sebi (Issue and Listing of Securitised Debt Instruments and Security Receipts) regulations, 2008, with the Reserve Bank's 2021 guidelines on securitisation of standard assets.

The Securities and Exchange Board of India (Sebi) invites feedback from the public on the draft circular with regards to periodic disclosure requirements for trustee of the special purpose distinct entity until July 7.