Transactions in Corporate Bonds through Request for Quote (RFQ) platform by Stock Brokers (SBs)
Summary
This circular mandates Stock Brokers to execute a minimum percentage of their proprietary corporate bond trades on the Request for Quote platform. The requirement starts at 10% effective July 1, 2023, and increases to 25% effective April 1, 2024. Stock Exchanges are directed to implement these provisions and report compliance to SEBI.
Text
With effect from July 01, 2023, for all the trades in proprietary capacity, SBs shall undertake at least 10% of their total secondary market trades by value in CBs in that month by placing/seeking quotes through one-to-one (OTO) or one-to-many (OTM) mode on the RFQ platform of stock exchanges.
Further, with effect from April 01, 2024, for all the trades in proprietary capacity, SBs shall undertake at least 25% of their total secondary market trades by value in CBs in that month by placing/seeking quotes through OTO or OTM mode on the RFQ platform of stock exchanges.
SBs shall consider the trades executed by value through OTO or OTM mode of RFQ with respect to the total secondary market trades in CBs, during the current month and immediate preceding two months on a rolling basis. Only trades pertaining to proprietary capacity of SBs shall be considered for the purpose of such calculations.
SBs are encouraged to place bids (in proprietary capacity or for clients) on RFQ platform through OTM mode, as the same shall contribute towards achieving better price discovery.
bring the provisions of this circular to the notice of their members and also disseminate the same on their websites;
make amendments to the relevant bye-laws, rules and regulations for the implementation of the above provisions;
communicate to SEBI, the status of the implementation of the provisions of this circular in their monthly development report;
file the compliance report beginning August 2023 with the Department of Debt and Hybrid Securities (DDHS), SEBI.
This circular is issued in exercise of powers conferred under Section 11(1) of the Securities and Exchange Board of India Act, 1992, to protect the interests of investors in securities and to promote the development of, and to regulate the securities markets.
Source: SecMarx — Transactions in Corporate Bonds through Request for Quote (RFQ) platform by Stock Brokers (SBs). Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.