SEBI mulls bond distributor network, tighter ad rules to boost retail participation
The proposals aim to make corporate bonds more accessible to retail investors while strengthening safeguards around recommendations, incentives and investor communication
The Securities and Exchange Board of India (SEBI) is considering a plan that includes establishing a network of Fixed Income Channel Partners (FICPs) and tightening advertising rules for online bond platforms. This initiative aims to increase retail participation in corporate bonds, which currently has less diversity compared to institutional investment.
FICPs would aid investors with tasks like onboarding, documentation, KYC, and transactions, while orders would need to be submitted directly through the Online Bond Placement Platform (OBPP). OBPPs would not be permitted to provide FICPs with incentives like gift vouchers or electronic devices to secure sales targets. The FICPs must ensure that financial incentives do not influence their recommendations regarding securities or platforms.
Additionally, the revised OBPP advertisement code requires specific disclosures such as the issuer, tenor, credit rating, and yield to maturity in advertisements for individual securities. These advertisements must also include a warning that fixed returns are not guaranteed and that debt securities carry market, credit, and default risks.
Both proposals are currently open for public comment until September 11, and submissions must be in English, complete sentences, and in line with the platform's community guidelines.
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