Guidelines for providing dedicated Debt Segment on Stock Exchanges
Summary
SEBI issues guidelines for stock exchanges to establish dedicated debt segments with distinct trading, clearing, and settlement mechanisms. The framework mandates separate retail and institutional markets, specific risk management margins, and adherence to T+1 or T+2 settlement cycles based on market type. Eligible entities must register under SEBI regulations, and exchanges are required to frame bye-laws and submit applications for approval.
Text
The debt segment shall offer separate trading, clearing, settlement, reporting facilities and membership to deal in : (i) "debt securities" as defined in Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008; (ii) Government Securities, Treasury Bills, State Government loans, SLR and Non-SLR Bonds issued by Financial Institutions, municipal bonds, single bond repos, basket repos and CBLO kind of products subject to RBI approval, where required; (iii) Securitized debt instruments as defined in SEBI (Public Offer and Listing of Securitised Debt Instruments)Regulations, 2008; (iv) any other debt instruments as may be specified from time to time by the competent authority.
An existing stock exchange or new stock exchange desirous of setting up debt segment may make an application to SEBI, providing operational, regulatory and any other necessary details.
This segment shall list all the securities and debt instruments mentioned at para 3 above.
The debt segment shall offer electronic, screen based trading... provide separate platforms for the markets described below - a. Retail market - which shall be a market for listing of and trading in publicly-issued debt instruments... b. Institutional market - which shall be a market for non-publicly-issued debt instruments with a market lot size of minimum Rs 1 crore.
In addition to institutional investors, Direct Market Access (DMA) facility shall be extended to other investors to participate in Institutional market of debt segment. In this regard, the provisions as stipulated in SEBI circular MRD/ DoP/SE/Cir- 7 /2008 dated April 03, 2008, MRD/DoP/SE/Cir- 03 /2009 dated February 20, 2009 and CIR/MRD/DP/ 20 /2012 August 02, 2012 and modifications thereto shall be applicable.
The trading hours shall be from 9:00 hours to 17:00 hours to be in alignment with trading hours of government securities as issued by RBI.
In case of negotiated trades by members of the debt segment, the trades shall be reported to stock exchange within 30 minutes of the trade.
All trades shall be cleared and settled through a clearing corporation. For this purpose, all trading members shall be self clearing members or may clear through a clearing member.
For institutional market: All trades shall be settled on T+1 rolling settlement on DVP-I basis using RBI RTGS account... For retail market: The trades shall be settled on T+2 rolling settlement on DVP-III basis with settlement guarantee.
For retail market, a uniform margin rate of 10% shall be applicable on debt instruments with rating of AA or above... and 25% for all other debt instruments. Further, in case of shortages, there shall be compulsory close-out with a mark up of 5% in case of debt instruments which are assigned a credit rating of AA and above and 10% in case of other debt instruments.
The clearing corporation shall specify appropriate risk management framework for each market... This shall be approved by SEBI.
With an objective to have centralised repository for trades in debt instruments, the stock exchanges shall report trade information to a common trade repository as may be specified by SEBI.
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Source: SecMarx — Guidelines for providing dedicated Debt Segment on Stock Exchanges. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.