SEBI to launch pilot for bond tokenisation; eases FPI onboarding process

The Securities and Exchange Board of India (SEBI) is set to launch a pilot project for tokenising bonds "in the near future", aiming to enhance accessibility, transparency, and efficiency in the market. The initiative, coordinated with the Reserve Bank of India (RBI), will explore using a shared ledger to facilitate simultaneous security and money transfers, thus streamlining settlement and reducing reconciliation costs.

SEBI Whole-Time Member Amarjeet Singh disclosed these plans at a Mumbai event, emphasizing that the pilot is not about establishing a separate trading market, but rather about improving the existing bond market's simplicity, speed, and efficiency. The regulator is also consulting on a "Credit Risk-o-Meter" to bolster investor protection in the bond market.

Furthermore, SEBI plans to roll out a framework for fixed income channel partners, akin to mutual fund distributors, with the goal of expanding market reach while preserving accountability and investor safeguards. In addition, SEBI has eased the onboarding process for foreign portfolio investors (FPIs) by permitting them to submit a digitally signed Power of Attorney, eliminating the need for notarisation, apostillisation, or consularisation.

This measure, effective immediately, aims to accelerate FPI onboarding and bolster ease of doing business for FPI applicants.