Modifications to provisions of Chapter XXI of NCS Master Circular dealing with registration and regulatory framework for Online Bond Platform Providers (OBPPs)
Summary
This circular modifies Chapter XXI of the NCS Master Circular to update the regulatory framework for Online Bond Platform Providers (OBPPs). It expands the permissible products OBPPs can offer to include listed government securities, sovereign gold bonds, and other regulated financial instruments. The document also mandates specific disclosure disclaimers, agreement requirements with third-party sellers, and order receipt procedures.
Text
An entity acting as an Online Bond Platform Provider shall offer only the following products or securities or services on its Online Bond Platform: Listed debt securities, listed municipal debt securities and listed securitised debt instruments; Debt securities, municipal debt securities and securitised debt instruments proposed to be listed through a public offering; Listed Government Securities, State Development Loans and Treasury Bills; Listed Sovereign Gold Bonds; and Other products or securities or services that are regulated by a financial sector regulator viz. SEBI, RBI, IRDAI or PFRDA.
It is also reiterated that an entity acting as an Online Bond Platform Provider shall divest itself of offerings of other products or securities or services which are not permitted under the clause 5.2 of this Chapter.
If the online bond platform or any other platform/ website of the Online Bond Platform Provider has any link/ tab to websites/ platforms offering products or securities or services that are regulated by other financial sector regulators viz. RBI, IRDAI, or PFRDA, then once a user clicks on such tab/ link, the following disclaimer shall be displayed at all times in legible font: “<Name of the product> is regulated by <RBI/ IRDAI/ PFRDA>” In case the Online Bond Platform Provider offers products or securities or services that are regulated by SEBI on its online bond platform or any other platform/ website, the relevant SEBI regulations as applicable to the product / security / service shall apply.
Where the entity allows third party sellers of products or securities or services as specified in clause 5.2.1 to 5.2.4 of this Chapter, to use the OBP to sell such products or securities or provide such services, the entity shall, before taking up an assignment of offering of such products or securities or services on its OBP, enter into an agreement in writing with such sellers that clearly defines the inter-se relationship and sets out their mutual rights, liabilities and obligations relating to such assignments.
All Orders with respect to securities as specified in clause 5.2.5 of this Chapter shall be as per the applicable laws and regulations of the respective financial sector regulators.
The entity shall, on placement of an order by an investor, shall issue without delay to the investor, an electronic order receipt which shall, inter-alia, include date and time of order, details of counter-parties involved, quantity and amount proposed to be transacted, etc. The entity shall, upon execution of the order, forthwith issue a deal sheet to the investor for all transactions, stating all the relevant information regarding the transaction which shall inter-alia include date and time of placing of the order, date and time of settlement of the order, details of counter-parties involved, quantity and amount transacted, as may be applicable. The entity, post execution of order, in case of third party sale of debt products or securities or services on the OBP, shall issue without delay to the seller, a quote receipt which shall, inter-alia, include date and time of quote, details of counter-parties involved, quantity and amount quoted, etc.
All advertisements shall be accompanied by a standard warning in legible font stating “Investments in debt securities/ municipal debt securities/ securitised debt instruments are subject to risks including delay and/ or default in payment. Read all the offer related documents carefully”. No addition or deletion of words shall be made to the standard warning.
Any Online Bond Platform Provider who fails to comply with the provisions of this circular shall be liable for action specified under the SEBI Act and any rules, regulations and circulars issued thereunder.
The Circular is issued in exercise of the powers conferred under Section 11(1) of the Securities and Exchange Board of India Act, 1992 read with Regulation 55 (1) of the SEBI (Issue and Listing of Non-convertible Securities) Regulations, 2021, Regulation 29 of SEBI (Issue and Listing of Municipal Debt Securities) Regulations, 2015 and Regulation 48 of SEBI (Issue and Listing of Securitised Debt Instruments and Security Receipts) Regulations, 2008 to protect the interest of investors in securities and to promote the development of, and to regulate the securities market.
The Stock Exchange(s) are directed to: bring the provisions of this circular to the notice of Stock Brokers/ Online Bond Platform Providers and also disseminate the same on their websites; make necessary amendments to the relevant bye-laws, rules and regulations for the implementation of the above directions in coordination with one another to achieve uniformity in approach and communicate to SEBI; and monitor the operations carried out by Online Bond Platform Providers.
Source: SecMarx — Modifications to provisions of Chapter XXI of NCS Master Circular dealing with registration and regulatory framework for Online Bond Platform Providers (OBPPs). Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.