**Summary:**
This circular, reference number SEBIHOAFDAFDPOD2PCIR2023138, issued by the Securities and Exchange Board of India (SEBI) on August 7, 2023, addresses transactions in corporate bonds by Foreign Portfolio Investors (FPIs) through the Request for Quote (RFQ) platform. Addressed to all FPIs and Designated Depository Participants (DDPs) and Custodians, the circular mandates that FPIs must execute at least 10% of their total secondary market trades in corporate bonds, by value, via the RFQ platform of stock exchanges on a quarterly basis. This requirement aims to increase liquidity on the RFQ platform and enhance transparency in secondary market trading of corporate bonds. The mandate becomes effective October 1, 2023. This directive is issued under Section 11(1) of the Securities and Exchange Board of India Act, 1992, and Regulations 205 and 44 of the SEBI Foreign Portfolio Investors Regulations, 2019. For further information, Vikash Narnoli, Deputy General Manager, can be contacted at 022 26449161 or vikashn@sebi.gov.in. The complete circular is available on the SEBI website under the "LEGAL Circulars" section.
Key Entities Referenced
Foreign Portfolio Investors: A category of investors regulated by SEBI and involved in trading in the Indian securities market.
Designated Depository Participants: Entities that provide depository services to Foreign Portfolio Investors (FPIs).
Request for Quote: An electronic platform of stock exchanges for trading in corporate bonds.
Corporate Bonds: Debt instruments issued by corporations to raise capital.
Securities and Exchange Board of India: The regulatory body for the securities market in India (SEBI).
Securities and Exchange Board of India Act, 1992: The act of parliament that established SEBI and defines its powers and functions.
SEBI Foreign Portfolio Investors Regulations, 2019: Regulations governing the operation of Foreign Portfolio Investors in the Indian securities market.
Vikash Narnoli: Deputy General Manager at SEBI, responsible for the issuance of the circular.
CIRCULAR
SEBI/HO/AFD/AFD-POD-2/P/CIR/2023/138 August 07, 2023
To,
All Foreign Portfolio Investors ("FPIs")
All Designated Depository Participants ("DDPs")/Custodians
Madam/Sir
Subject: Transactions in Corporate Bonds through Request for Quote (RFQ)
platform by FPIs
1. SEBI has been taking steps to increase the liquidity on RFQ platform of stock
exchanges and to enhance the transparency and disclosure pertaining to trading in
secondary market in corporate bonds. Certain stipulations have been prescribed for
transactions by SEBI registered intermediaries on RFQ platform.
2. Considering the above and with a view to increase liquidity on RFQ platform vis-à-
vis trading in Corporate Bonds by FPIs., it is decided that FPIs shall undertake at
least 10% of their total secondary market trades in Corporate Bonds by value by
placing/seeking quotes on the RFQ platform of stock exchanges, on a quarterly
basis.
3. The aforesaid requirement shall come into force with effect from October 01, 2023.
4. This circular is issued in exercise of powers conferred under Section 11(1) of the
Securities and Exchange Board of India Act, 1992, read with the provisions of
Regulation 20(5) and Regulation 44 of SEBI (Foreign Portfolio Investors)
Page 1 of 2Regulations, 2019 to protect the interests of investors in securities and to promote
the development of, and to regulate the securities markets.
5. The circular is available on SEBI website at www.sebi.gov.in under the link “LEGAL
> Circulars”.
Yours faithfully,
Vikash Narnoli
Deputy General Manager
Tel.No: 022 26449161
vikashn@sebi.gov.in
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