SEBI Unveils Liquidity Boost for Debt Securities

SEBI has introduced a liquidity window facility via stock exchanges, allowing investors to sell listed debt securities back to issuers. This aims to enhance liquidity, particularly benefiting retail investors, by providing put options on specific dates. The facility applies to new issuances and mandates transparency and regulatory compliance.

In a bid to boost liquidity in the debt securities market, SEBI announced a new liquidity window facility on Wednesday that allows investors to sell listed debt securities back to issuers through a stock exchange mechanism.

The initiative, set to commence from November 1, is designed to benefit investors, particularly retail investors, by offering a put option on designated dates to ensure liquidity. SEBI highlighted several aspects in its circular, noting how corporate bonds are generally seen as illiquid due to institutional investors holding them until maturity.

Issuers will have the discretion to apply this facility to new issuances, requiring board approval and oversight by the Stakeholders Relationship Committee or an equivalent. The tool mandates transparency and nondiscrimination among eligible investors, aiming to enhance trading activity and investment in debt securities.

(With inputs from agencies.)