Sebi Introduces Liquidity Window for Debt Securities

Sebi has proposed a new liquidity window facility for investors in debt securities via the stock exchange. This aims to enhance corporate bond market liquidity, especially for retail investors. Issuers can provide put options on debt securities at pre-specified dates. Public comments are invited till September 6.

In a bid to enhance liquidity in the corporate bond market, particularly for retail investors, Sebi has proposed a new liquidity window facility for debt securities through the stock exchange mechanism.

According to a draft circular released on Friday, Sebi's proposal aims to provide a regulated mechanism whereby issuers can offer put options on debt securities at pre-specified dates or intervals to investors. This facility will allow issuers to provide these put options, enabling investors to sell their debt securities back to the issuer before maturation. This can be done for both public and private placements of debt securities.

The Securities and Exchange Board of India (Sebi) has invited public comments on this draft circular until September 6. Issuers choosing to provide the liquidity window facility must first receive board approval, and the process will be monitored by a relevant committee. The facility will be available only after one year from the issuance date, with additional disclosure and reporting requirements to ensure transparency.

(With inputs from agencies.)