Transaction in Corporate Bonds/Commercial Papers through RFQ platform and enhancing transparency pertaining to debt schemes
Summary
SEBI mandates that Mutual Funds execute at least 10% of their secondary market trades in Corporate Bonds via the RFQ platform on a monthly rolling basis. Transactions involving Mutual Funds on both sides must be executed through the RFQ platform, and specific portfolio disclosures including yield are required fortnightly. These provisions come into force from October 1, 2020, under the powers conferred by Section 11(1) of the SEBI Act.
Text
Mutual Funds shall undertake at least 10% of their total secondary market trades by value (excluding Inter Scheme Transfer trades) in the Corporate Bonds by placing/seeking quotes through one-to-many mode on the Request for Quote (RFQ) platform of stock exchanges on a monthly rolling basis.
All transactions in Corporate Bonds and Commercial Papers wherein Mutual Fund is on both sides of the trade shall be executed through RFQ platform of stock exchanges in one-to-one mode.
Any transaction entered by mutual fund in Corporate Bonds in one to many mode and gets executed with another mutual fund shall also be counted for the aforesaid 10% requirement.
Disclosure shall be done on fortnightly basis within 5 days of every fortnight. In addition to the current portfolio disclosure, yield of the instrument shall also be disclosed.
The above shall come into force with effect from October 1, 2020.
This 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 77 of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996.
Source: SecMarx — Transaction in Corporate Bonds/Commercial Papers through RFQ platform and enhancing transparency pertaining to debt schemes. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.