The Securities and Exchange Board of India (SEBI) is set to launch a bond tokenisation pilot in the next six to nine months, alongside advancing reforms in various areas such as corporate bond liquidity, broker capital norms, IPO pricing, and foreign investor access. SEBI Chairman Tuhin Kanta Pandey revealed this development at the ICICI Securities India Investor Conference, emphasizing the initiative’s significance in enhancing India’s debt markets and accessibility to fixed-income instruments.
SEBI is actively working on a market-making framework to enhance liquidity in secondary trading within the corporate bond market. Pandey highlighted the importance of collaboration with the Reserve Bank of India for upcoming reforms, especially with the central bank already issuing draft guidelines on total return swaps and corporate bond derivatives earlier this year. The implementation of these products is contingent upon finalizing the regulatory framework.
Despite a surge in corporate bond issuances exceeding Rs 9 lakh crore and an overall market capitalization reaching about 128% of GDP, SEBI acknowledged the relatively shallow liquidity in the secondary bond market compared to the system’s size. The regulator’s revised methodology, utilizing detailed market data and broader instrument coverage, provides a more accurate assessment of market strength, reflecting the increasing role of capital markets in household savings and wealth creation.
SEBI is also reassessing the variable net worth requirements for stockbrokers, with Pandey indicating that the proposal is still under evaluation without a definitive decision. The potential recalibration of the framework aims to strike a balance between capital adequacy and operational flexibility for intermediaries.
