In an advisory paper, the regulator suggested that registered stockbrokers or commercial bankers could act as market makers in the corporate bond market, subject to minimum net worth requirements.

Market regulator SEBI on Friday extended the timeline for providing comments on proposals for a market-making mechanism in the corporate bond market until January 16, 2022.

In an effort to enhance liquidity in the corporate bond secondary market, Sebi proposed a market-making mechanism in the corporate bond market in November 2021.
It has sought public comment by December 16, 2021, but the deadline has now been extended to January 16, 2022.

Comments should be sent to the organizer in the format specified.

In an advisory paper, the regulator suggested that registered stockbrokers or commercial bankers could act as market makers in the corporate bond market, subject to minimum net worth requirements.

To ensure the capital adequacy of the market maker, SEBI suggested that only stockbrokers or commercial bankers with an additional net worth of Rs 10 crore in addition to the requirements of their SEBI rules should be allowed to act as market makers.

Market makers are the entities that provide buy and sell prices for corporate bonds to create liquidity in the secondary market.

The watchdog noted that a vibrant secondary market in corporate bonds could be realized if a market making mechanism was introduced.

Among other things, SEBI outlined the responsibilities of the market maker and also proposed the risk management and governance framework.

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