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bond market: Sebi caps international securities identification numbers to boost liquidity in bond market

With an aim to boost liquidity in the corporate bond market, capital markets regulator Sebi on Monday put a cap on the number of ISINs for debt securities issued on private placement basis maturing in a financial year. The ISIN (International Securities Identification Number) code, which has 12 characters, is used for identifying securities like stocks, bonds, warrants and commercial papers.

With respect to private placement of debt securities, Sebi said that a maximum of 14 ISINs maturing in any financial year will be allowed for an issuer of debt securities.

It has also decided to put a cap of six ISINs for the capital gains tax debt securities by the authorised issuers under the Income Tax Act. The current limit is 12.

The capping of ISINs is expected to reduce fragmentation in the primary market and enhance liquidity in the secondary market.

Of the 14 ISINs, a maximum of nine ISINs maturing per financial year will be allowed for plain vanilla debt securities. Within this limit of nine ISINs, the issuer can issue both secured and unsecured debt securities.

In case the total outstanding amount across the nine ISINs, maturing in a given financial year, reaches Rs 15,000 crore then three additional ISINs would be permitted to mature in the same financial year. The same should be intimated by the issuer to the stock exchanges and depositories.

“Maximum of five ISINs maturing per financial year shall be allowed for structured debt securities and market linked debt securities. Where an issuer issues only structured/ market linked debt securities, the maximum number of ISINs allowed to mature in a financial year shall be nine,” Sebi said.

These thresholds may be reviewed periodically to further reduce fragmentation in the corporate bond market.

The new rules will be applicable to ISINs used to issue debt securities from April 1, 2023. The newly capped limits would not be applicable to ISINs utilised for issuance of debt securities up to March 31, 2023 and maturing in later years. PTI SP HVA


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