The Securities and Exchange Board of India (SEBI) said on Wednesday that from December mutual funds Corporate bonds on the Request for Quote (RFQ) platform of stock exchanges will have to take a minimum of 25% of their total secondary market trades by value.
The earlier requirement, which came into effect from October 2020, was 10% of total secondary market trades by value in corporate bonds.
In addition, mutual funds will now be required to do a minimum of 10% of their total secondary market trades by the RFQ platform based on value in commercial papers.
This has been done to further boost liquidity on the exchange platform as well as to enhance transparency and disclosure relating to debt schemes and investments by mutual funds in corporate bonds or commercial papers. It is based on the recommendations of the Mutual Fund Advisory Committee (MFAC).
According to market regulatorThe percentage will be considered on the average of secondary trades based on value in the immediately preceding three months.
For example, for December 2021, the mutual fund will have to pay 25% (by value) of its average secondary market trades (excluding inter scheme transfer trades) made in the immediately preceding three months, i.e. July, August and September, for corporate bonds. ) will have to do. To quote or solicit through RFQ platform of stock exchanges.
Meanwhile, mutual funds have been allowed to accept contract notes from brokers for transactions done in one-to-one (OTO) and one-to-many (OTM) modes of the RFQ platform.
SEBI Chairman Ajay Tyagi had said last year that mutual funds have been the most affected among the liquidity issues brought about by the Covid-19 pandemic.
He had further said that the use of this RFQ platform by mutual funds as well as institutional investors would lead to better transparency and value discovery in the bond market.
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