Sebi has barred NSE brokers from trading in unlisted bonds, which has led to a complete standstill in the primary bond market.
There are no issues expected this week till Sebi clarifies on the participation of qualified institutional buyers (QIBs) of corporate bonds.
The diktat poses an operational problem in trading in these bonds as QIBs such as mutual funds, banks and financial institutions rely on brokers to route these transactions.
Most players are engaged in one-to-one deals through brokers but no contract note is issued. In order to facilitate trade in unlisted bonds, which constitute almost 80 per cent total outstanding stock of non SLR debt, mutual funds, primary dealers are dealing among themselves.
Banks are keeping away as they are not sure of the exposure norms. Most players, which are not sure of the implications of the guidelines, are selling securities to meet their fund requirement and maintaining the stock of non-SLR papers. As a banker put it,
