Security and Covenant Monitoring using Distributed Ledger Technology
Summary
This section mandates the development and hosting of a 'Security and Covenant Monitoring System' by Depositories using distributed ledger technology to enhance transparency in non-convertible securities. It outlines the specific technical responsibilities of Depositories, including data integrity, stakeholder access, and alert mechanisms for compliance monitoring. Furthermore, it details the procedural obligations for Issuers and Debenture Trustees regarding the recording, validation, and periodic monitoring of security creation, asset cover, and covenants. This section mandates the recording and validation of interest and principal payments for non-convertible securities by issuers and debenture trustees. It outlines procedures for handling missing information, default assessments, and the release of charges upon redemption. Additionally, it requires the timely upload and validation of credit rating information by issuers and Credit Rating Agencies. This section mandates issuers to populate specific interest and principal payment details during the creation of an ISIN or temporary ISIN. It further requires issuers to update the status of these payments within one working day of th
Text
a platform for ‘Security and Covenant Monitoring System’ (‘system’) hosted by Depositories shall be developed based on working group recommendations.
The system shall be used for recording and monitoring of the security created and monitoring of covenants of non-convertible securities.
Depositories shall create, host, maintain and disseminate the system for security and covenant monitoring using distributed ledger technology.
Provide secure login credentials to Issuers, CRAs, debenture trustees (DTs) etc. for recording and verifying requisite information on the system.
Put in place adequate safeguards to ensure the integrity and security of the data on the system.
Share information with the other depository for integrating and maintaining a compatible system.
Develop an alert mechanism to be sent to the stakeholders for submission, acceptance and rejection of information and alerts for periodic and event based compliances.
Wherever necessary, provide the feature of document upload by the various stakeholders on the system.
Provide functionality of maintaining a trail/ log of all the communication/ interaction amongst various stakeholders... on account of recording and verification of information.
Provide functionality in the system to make changes in already recorded information by stakeholders... and verification of same by responsible stakeholder.
Be responsible for the effective and smooth functioning of the system and shall develop a mechanism to establish accountability/ responsibility for the rectification of various issues.
the system... shall enable various stakeholders to record information for... Security creation, asset cover and covenants; Periodical monitoring... Interest and redemption payment... Credit Rating information.
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Source: SecMarx — Security and Covenant Monitoring using Distributed Ledger Technology. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.