Sebi, RBI discuss steps to boost trading in corporate bond derivatives

Securities and Exchange Board of India and the Reserve Bank of India are in discussions on corporate bond index derivatives to strengthen trading activity in corporate debt securities, Sebi whole-time member Ananth Narayan G said on Friday.

Speaking at the ASSOCHAM National Council for Corporate Bonds, Narayan said, "Corporate bond index derivatives trading is another frontier in this regard. Good discussions are ongoing between Sebi and RBI, and we are hopeful that we will see progress soon."  He pointed out that secondary bond volumes are about Rs 1.4 lakh crore a month, while equity markets trade around that much in a single day. If bond trading can be made more comparable to equity trading-- in terms of settlement, platforms, and even trading culture the investment class could see significant growth, he added.

In 2023, Sebi allowed stock exchanges to launch derivative contracts on indices of corporate debt securities rated AA+ and above, but the move failed to gain traction.

On the municipal bonds front, Narayan noted that from 2017 till date, there have been just 16 issuances raising Rs 3,134 crore, a mere 0.02 per cent of GDP.

"The potential here is immense, but so is the need for capacity building and investor confidence," he said.

Outstanding corporate bonds have risen from Rs 17.5 lakh crore at the end of FY15 to Rs 53.6 lakh crore as of March 2025, a CAGR of over 12 per cent. In FY25 alone, nearly Rs 10 lakh crore of corporate bonds were issued, and in FY26, issuances have already touched Rs 3.5 lakh crore by July.

Despite this growth, the market remains dominated by institutional investors such as banks, insurers, provident funds, and mutual funds, while retail and foreign investors continue to remain on the fringes, Narayan added.