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NEW DELHI: In order to improve liquidity within the bond market and to present alternative to the traders to hedge their positions, Sebi on Tuesday allowed stock exchanges to launch future contracts on corporate bond indices.
The index ought to composed of corporate debt securities, constituents of the index ought to have enough liquidity and diversification at issuer stage and the constituents of the index ought to be periodically reviewed, Sebi mentioned in a round.
Further, single issuer shouldn’t have greater than 15 per cent weight within the index, there ought to be no less than eight issuers within the index, and the index shouldn’t have greater than 25 per cent weight in a selected group of issuers (excluding securities issued by public sector undertakings, public monetary establishments and public sector banks).
“The value of the Cash Settled Corporate Bond Index Futures (CBIF) contracts shall not be less than Rs 2 lakh at the time of introduction,” Sebi mentioned.
The stock exchanges could introduce contracts of up to a tenure of three years.
For each CBIF, stock exchanges will set an preliminary worth band at 5 per cent of the earlier closing worth or base worth thus stopping acceptance of orders for execution which are positioned past the set band.
The buying and selling hours ought to be between 9:00 AM and 5:00 PM on all working days from Monday to Friday.
The stock exchanges desirous of introducing such contracts can have to submit an in depth proposal to Sebi for approval, offering particulars relating to underlying corporate bond index, the index methodology, contract specs, relevant buying and selling, clearing & settlement mechanism, danger administration framework, the safeguards to guarantee market integrity, investor safety and surveillance techniques.
The regulator had constituted a working group of representatives of NSE, BSE and MSEI to make suggestions on the matter of ‘Derivatives on Bond Indices’.
Based on the submissions made by the working group and suggestions of Sebi’s Secondary Market Advisory Committee, Sebi has determined to allow stock exchanges to introduce spinoff contracts on indices of corporate debt securities rated AA+ and above.
In a separate round, the Securities and Exchange Board of India (Sebi) got here out with a framework for change in charge of portfolio managers offering co-funding providers.
Pursuant to grant of prior approval by Sebi, so as to allow current traders to take properly-knowledgeable determination concerning their continuance or in any other case with the modified administration, the portfolio supervisor is required to inform its current traders concerning the proposed change prior to effecting the identical and provides an possibility to exit with none exit load, inside a interval of no less than 30 calendar days from the date of such communication.
However, for the shoppers underneath co-funding portfolio administration providers, the portfolio supervisor can have to adjust to sure circumstances.
The settlement between the portfolio supervisor and the shopper consists of funding goals and the providers to be offered, interval of the contract and provision of early termination, if any and funding strategy, areas of funding and restrictions, if any, imposed by the shopper with regard to the funding in a selected firm or trade, amongst others.
The index ought to composed of corporate debt securities, constituents of the index ought to have enough liquidity and diversification at issuer stage and the constituents of the index ought to be periodically reviewed, Sebi mentioned in a round.
Further, single issuer shouldn’t have greater than 15 per cent weight within the index, there ought to be no less than eight issuers within the index, and the index shouldn’t have greater than 25 per cent weight in a selected group of issuers (excluding securities issued by public sector undertakings, public monetary establishments and public sector banks).
“The value of the Cash Settled Corporate Bond Index Futures (CBIF) contracts shall not be less than Rs 2 lakh at the time of introduction,” Sebi mentioned.
The stock exchanges could introduce contracts of up to a tenure of three years.
For each CBIF, stock exchanges will set an preliminary worth band at 5 per cent of the earlier closing worth or base worth thus stopping acceptance of orders for execution which are positioned past the set band.
The buying and selling hours ought to be between 9:00 AM and 5:00 PM on all working days from Monday to Friday.
The stock exchanges desirous of introducing such contracts can have to submit an in depth proposal to Sebi for approval, offering particulars relating to underlying corporate bond index, the index methodology, contract specs, relevant buying and selling, clearing & settlement mechanism, danger administration framework, the safeguards to guarantee market integrity, investor safety and surveillance techniques.
The regulator had constituted a working group of representatives of NSE, BSE and MSEI to make suggestions on the matter of ‘Derivatives on Bond Indices’.
Based on the submissions made by the working group and suggestions of Sebi’s Secondary Market Advisory Committee, Sebi has determined to allow stock exchanges to introduce spinoff contracts on indices of corporate debt securities rated AA+ and above.
In a separate round, the Securities and Exchange Board of India (Sebi) got here out with a framework for change in charge of portfolio managers offering co-funding providers.
Pursuant to grant of prior approval by Sebi, so as to allow current traders to take properly-knowledgeable determination concerning their continuance or in any other case with the modified administration, the portfolio supervisor is required to inform its current traders concerning the proposed change prior to effecting the identical and provides an possibility to exit with none exit load, inside a interval of no less than 30 calendar days from the date of such communication.
However, for the shoppers underneath co-funding portfolio administration providers, the portfolio supervisor can have to adjust to sure circumstances.
The settlement between the portfolio supervisor and the shopper consists of funding goals and the providers to be offered, interval of the contract and provision of early termination, if any and funding strategy, areas of funding and restrictions, if any, imposed by the shopper with regard to the funding in a selected firm or trade, amongst others.
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