Sebi widens bond access while restricting online sales pitches
Sebi proposed bond-distribution partners for smaller cities and curbs on online pitches implying guaranteed returns. Thin trading in the new closing auction created a separate market-design problem.
Economics & Markets··Night
Distribution partners would reach smaller cities
Sebi proposed a new class of fixed-income distribution partners working through licensed online bond platforms. The plan aims to widen access to debt securities in Tier-II and Tier-III cities and rural districts. Individual partners would have to be Indian citizens aged at least 18, have completed class 12 and hold a NISM certificate in fixed-income securities. Partners could not hold client money or securities and would be paid only by the platform appointing them. Commission would be capped at 2.5 per cent of the investment value, with comments open until 11 September. India's corporate bond market grew from 17.5 trillion rupees at the end of the 2015 financial year to 60 trillion rupees on 31 July 2026. Debt issues raised 9.1 trillion rupees last financial year, about twice the amount raised through equity issues.[1]
Yield pitches would carry standard facts and warnings
A second Sebi consultation released the same day proposes barring online bond platforms from advertisements built around urgency or fear of missing out. Unsupported phrases such as high yield, high rated and high returns would be prohibited. Claims of fixed returns, predictable returns and passive income would be restricted so that advertising does not imply a guaranteed outcome. An advertisement naming a specific security would have to disclose the issuer, tenor, credit rating, nature of the security, clean and dirty prices, yield to maturity and a credit-risk indicator. Any use of fixed returns would need a prominent warning that returns are not guaranteed and that debt securities carry market, credit and default risk. Comments on this proposal also close on 11 September.[2]
The closing auction ran into thin volumes
Indian exchanges introduced the new closing auction session on 3 August. Continuous trading in stocks with futures and options contracts now ends 15 minutes before the wider market, followed by a 20-minute auction that sets the official close at one equilibrium price. Nuvama Institutional Equities said index-option premium volumes on the BSE fell about 14 per cent from the previous week. Average daily contracts declined more than 8 per cent, while premium per contract fell 6 per cent to 1,631 rupees. Confusion after the change led some retail traders to declare a no-trade day on 12 August. Sebi issued an ex-parte interim order against two firms over allegedly manipulative auction trades; its officials say greater participation should resolve the early problems.[3]
