Market regulator Securities and Exchange Board of India (Sebi) today said trade in corporate bonds would have to be routed through clearing corporations from December 1, a move that analysts say would check factors that aggravated financial crisis.
Directives of the Sebi will be applicable to corporate bond trading that are not currently settled through clearing corporations or clearing houses of stock exchanges.
"It has now been decided that, all trades in corporate bonds between specified entities ... Shall necessarily be cleared and settled through the National Securities Clearing Corp (NSCCL) or Indian Clearing Corp (ICCL)," it said.
The specified entities are mutual funds, foreign institutional investors/ sub-accounts, venture capital funds, foreign venture capital investors, portfolio managers, and RBI regulated entities, the Sebi said.
"The provisions of this circular shall be applicable to all corporate bonds traded Over The Counter (OTC) or on debt segment of stock exchanges on or after Dec 01, 2009," it said.
SMC Capitals Equity Head Jagannadham Thunuguntla said, "It is a learning from the global financial crisis. One of the major reasons for the crisis to be so severe was that many fancy financial instruments were traded OTC with no records."
