While online bond platforms provide an avenue for investors, particularly non-institutional investors to access the bond market, their operations were outside the SEBI's regulatory purview, the circular put out on Monday said.
During the past few years, there has been an increase in the number of online bond platforms, offering debt securities, to non-institutional investors.
Most of such platforms are fintech companies or are backed by stock brokers/SEBI registered intermediaries. There has been a significant increase in the number of registered users who have transacted through such platforms.
"With the bond market offering tremendous scope for development,particularly in the non-institutional space, there is a need to place checks and balances in the form of transparency in operations and disclosures to the investors dealing with suchOBPs, measures for mitigation of payment and settlement risk, availability of redress mechanism in case of complaints, etc," the circular read.
Thus, in order to streamline the operations of these platforms and to facilitate the participation of investors in the bond market, SEBI felt there was a need to provide a regulatory framework for the working of such platforms.
The circular will come into force with immediate effect.
A platform that fails to comply with any of the provisions of the circular, shall be liable for action under the
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