Regulators to meet on corp debt mart week

The government has called a meeting of regulators later this week to sort out issues about jurisdiction for regulation of corporate debt market.

The R H Patil committee on debt market had noted that unclear demarcation of regulatory jurisdiction was one of the major bottlenecks holding back the development of corporate debt market.

Officials from both the Securities and Exchange Board of India (Sebi) and the Reserve Bank of India (RBI) would attend the meeting.

The government is of the view that corporate debt, since it comes under the umbrella definition of the word "securities", will be governed by Sebi. Therefore, Sebi would be entrusted with the responsible of monitoring the issuance amd listing and drafting of regulations apart from managing other operational issues.

RBI, on the other hand, would be responsible for regulating the reverse repo and repo part of the corporate debt market. The meeting is also expected to clear the hurdle in the way of allowing use of corporate papers for repo trading.

In repo and reverse repo trade, a market participant pledges a corporate paper in exchange for funds for a specific period and at rate determined by the market.

The finance minister, P Chidambaram, in his budget speech had said that the government would create a unified exchange-traded market for corporate bonds.

The Bombay Stock Exchange (BSE) has been chosen by Sebi for being the single platform for exchange-traded corporate bond market.