Guidelines for Issue and Listing of Structured Products/ Market Linked Debentures- Amendments
Summary
SEBI amends the guidelines for issuing and listing Structured Products and Market Linked Debentures (MLDs) to address regulatory changes regarding Credit Rating Agencies. The amendment mandates that MLD valuations must be conducted by an agency appointed by AMFI rather than a SEBI-registered CRA. This change aligns with the prohibition on CRAs performing non-rating activities post-May 30, 2020.
Text
SEBI vide circular no. CIR/IMD/DF/17/2011 dated September 28, 2011 prescribed guidelines for issue and listing of structured products/ Market linked Debentures (MLDs).
Para 4(f)(i) of the MLD circular specifies that issuer of MLDs shall appoint a third party valuation agency which shall be a Credit Rating Agency (CRA) registered with SEBI for carrying out valuation of MLDs.
Pursuant to amendment to SEBI (Credit Rating Agencies) Regulation, 1999 on May 30, 2018, a CRA cannot carry out any activity other than rating of securities post May 30, 2020.
In view of the above, therefore, it has been decided that valuation of MLDs shall be carried out by an agency appointed by AMFI for the purpose of carrying out valuation.
It shall be mandatory for the issuer to appoint a third party valuation agency which shall be an AMFI appointed valuation agency.
This circular is issued in exercise of powers conferred under Section 11(1) of the Securities and Exchange Board of India Act, 1992.
Source: SecMarx — Guidelines for Issue and Listing of Structured Products/ Market Linked Debentures- Amendments. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.