Market regulator directs MFs to trade corporate bonds on exchanges

Move aimed at improving transparency and price discovery

Sebi has directed mutual funds (MFs) to ensure that part of their trading activity in corporate bonds is done over the recently launched platforms on exchanges. 

In a circular issued on Wednesday, it said MFs shall undertake at least 10 per cent of their total secondary market trades (by value) “through… request for quote (RFQ) platform of stock exchanges”.

This percentage shall be calculated on the basis of the average value of secondary trades done in the preceding three months. 

Sebi Chairman Ajay Tyagi said: “We have decided to mandate MFs to use this platform in a phased manner. 

Use of this platform by other institutional investors will result in better transparency and price discovery in the bond market.” JASH KRIPLANI