Introduction of Liquidity Window facility for investors in debt securities through Stock Exchange mechanism
Summary
SEBI introduces a Liquidity Window facility allowing issuers of non-convertible debt securities to offer put options for early redemption. This framework aims to enhance market liquidity, particularly for retail investors, by establishing uniform norms for exercising these options on pre-specified dates. The facility is discretionary for issuers and applies only to prospective issuances listed via public or private placement. This section details the operational mechanics for exercising put options through the Liquidity Window, including blocking securities and handling bids. It establishes valuation standards based on mutual fund guidelines and mandates payment within one working day of window closure. Finally, it outlines issuer obligations regarding the disposal of tendered securities, reporting to exchanges, and continuous public disclosure of liquidity data.
Text
establishing a framework of providing a Liquidity Window facility by the issuers through use of put options exercisable on pre-specified dates or intervals will provide uniform norms for such issuer(s) to consider adopting Liquidity Window facility
introduce a Liquidity Window facility framework by use of put options as specified under Regulation 15 of the NCS Regulations, exercisable on pre-specified dates or intervals
An entity issuing debt securities, which are proposed to be listed, may at its option/discretion provide the Liquidity Window facility... at the time of issuance of such debt securities
The Liquidity Window facility can be provided only for prospective issuances of debt securities through public issue process or on a private placement basis (proposed to be listed)
the Issuer shall ensure that the Liquidity Window facility... has the prior approval of its Board of Directors
its implementation and outcome is monitored by Stakeholders Relationship Committee (SRC), in case of entities with listed specified securities... In case of only debt listed entities... monitored by its Board or such board-level committee
is objective, transparent, non-discretionary and non-discriminatory within the class of investors specified as eligible investors
its implementation or operation of the liquidity window facility does not compromise market integrity or risk management, asset liability management or liquidity management norms
The Issuer shall provide Liquidity Window facility only after the expiry of one year from the date of the issuance of the debt securities
such ISINs shall be exempted from the computation of maximum limit on ISINs as specified under Para 1 of Chapter VIII of the Master Circular
Eligible investors desirous of availing of the liquidity window shall hold the debt securities in demat form
aggregate limit for the exercise of put options... shall not be less than 10% of final Issue size of such debt securities
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Source: SecMarx — Introduction of Liquidity Window facility for investors in debt securities through Stock Exchange mechanism. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.