Transaction in Corporate Bonds through the RFQ platform
Transaction in Corporate Bonds through the Request for Quote (RFQ) platform by Portfolio Management Services (PMS)
- In order to enhance transparency pertaining to debt investments by Portfolio Management Services (PMS) in Corporate Bonds (CBs) and to increase liquidity on exchange platform, it is decided as under:
i.On a monthly basis, PMS shall undertake at least 10% of their total secondary market trades by value in CBs in that month by placing/seeking quotes through one-to-one (OTO) or one-to-many (OTM) modeon the Request for Quote platform of stock exchanges (RFQ).
ii.In order toensure compliance with the abovementioned 10 percent requirement, PMS shallconsiderthe trades executed by value through OTO or OTM mode of RFQ with respect to thetotal secondary market tradesin CBs, during the current month and immediate preceding two months on a rolling basis.
iii.All transactions in CBs wherein PMS is on both sides of the trade shall be executed through RFQ in OTO mode. However, any transaction entered by PMS in CBs in OTM mode whichgets executed with another PMS,shall be counted in OTM mode.
iv.PMSare permitted to accept the Contract Note from the stock brokersfor transactions carried out in OTO and OTMmodes of RFQ. - The above shall come into force with effect from April1, 2022.Accordingly, from the month of April 2022, PMS shall ensure that at least 10% (by value) of their secondary market trades in CBsin current month and immediate preceding two months (i.e. February 2022, March 2022 and April 2022) are executed by placing / seeking quotes through OTO or OTM mode of RFQ. Further, for the month of May2022, the secondary market trades executed in CBsin the months of March 2022, April 2022 and May 2022 shall be considered for the purpose of aforesaid calculation.
- This circular is issued in exercise of powers conferred under Section 11(1) of the Securities and Exchange Board of India Act, 1992 to protect the interests of investors in securities and to promote the development of, and to regulate the securities market.
Other Updates on SEBI
