Sebi Eases Rules for Online Bond Platforms

The Securities and Exchange Board of India (Sebi) has eased the regulatory framework for online bond platform providers (OBPPs). This move allows OBPPs to offer products and securities regulated by the International Financial Services Centres Authority (IFSCA) and certain tax-saving bonds.

The revised framework enables OBPPs to offer products or securities regulated by various financial sector regulators, including Sebi, the Reserve Bank of India (RBI), the Insurance Regulatory and Development Authority of India (IRDAI), IFSCA, and the Pension Fund Regulatory and Development Authority (PFRDA).

OBPPs can now offer bonds issued under Section 54EC of the Income Tax Act, 1961, or Section 85 of the Income-tax Act, 2025. For IFSCA-regulated products, OBPPs must follow the norms applicable to Sebi-registered stock brokers operating in the Gujarat International Finance Tec-City (GIFT-IFSC) and comply with applicable foreign exchange regulations.

Sebi has also introduced guidelines for tax-saving bonds, requiring OBPPs to provide disclosures on features such as eligible issuers, lock-in period, investment limits, non-transferable status, and tax benefits. The regulator has modified the compliance officer requirement for OBPPs, allowing them to appoint a compliance officer in accordance with the Sebi (Stock Brokers) Regulations, 2026.

The compliance officer must meet the prescribed National Institute of Securities Markets (NISM) certification requirements. These changes aim to promote ease of doing business and come into effect immediately.

The decision is expected to increase the range of products available on online bond platforms, providing investors with more options. The move is also likely to boost the development of the bond market in India.

Sebi's decision to allow IFSCA products on online bond platforms is a significant step towards integrating the domestic bond market with international markets. The introduction of tax-saving bonds on these platforms is expected to attract more retail investors to the bond market.

The revised framework is a part of Sebi's efforts to simplify and streamline the regulatory framework for online bond platforms. The regulator has been working to promote the development of the bond market and increase investor participation.

The changes are expected to have a positive impact on the bond market, making it more accessible and attractive to investors. With the increased range of products and simplified regulatory framework, online bond platforms are likely to play a more significant role in the development of the bond market in India.

In conclusion, Sebi's decision to ease the regulatory framework for online bond platforms is a significant step towards promoting the development of the bond market in India. The move is expected to increase investor participation, provide more options for investors, and integrate the domestic bond market with international markets.