SEBI Expands Online Bond Platform Rules, Allows IFSCA Products And 54EC Bonds

The Securities and Exchange Board of India (SEBI) has broadened the offerings for Online Bond Platform Providers (OBPPs). This includes allowing them to list products regulated by the International Financial Services Centres Authority (IFSCA) and bonds issued under certain tax provisions. The regulator made these changes based on feedback from market participants, aiming to enhance ease of doing business.

With these revised provisions, OBPPs can now offer a wider range of products, securities, and services that are under the purview of various financial sector regulators like SEBI, RBI, IRDAI, IFSCA, and PFRDA. They are also permitted to sell bonds issued under Section 54EC of the Income Tax Act, 1961, and those under Section 85 of the Income-tax Act, 2025.

For IFSCA-regulated products, OBPPs must adhere to the guidelines for SEBI-registered stock brokers operating within the GIFT-IFSC framework. They must also comply with FEMA regulations, including those related to overseas investments and the limits under the Liberalised Remittance Scheme (LRS). These products should be distinctly labeled as "international" or "overseas instruments" by the platforms. Additional disclosure requirements include the grievance redressal mechanism for investors.

The framework sets apart distinct rules for 54EC bonds. These can be made available via a dedicated section on the online bond platform or through another website or platform. OBPPs must inform investors that these are tax-specific instruments and direct complaints about them to the issuer, as they are not covered under SEBI's grievance redressal mechanism.

They also need to provide comprehensive information about 54EC bonds, including eligible issuers, lock-in period, investment limits, transferability, tax benefits, minimum application size, and exemption from SEBI's LODR Regulations. SEBI has also altered the compliance officer requirements for OBPPs, mandating a Company Secretary as their compliance officer, unlike the previous framework.