 "Sebi cuts face value of debt securities to boost retail participation")
Markets regulator Sebi on Wednesday drastically cut the face value of debt securities to Rs 10,000 from Rs 100,000 at present to boost participation of retail investors in the corporate bond market.
Market participants are of the view that lower ticket size of debt securities may encourage more non-institutional investors to participate in the corporate bond market which in turn may also enhance liquidity.
In a circular, Sebi said, "The issuer may issue debt security or non-convertible redeemable preference shares on private placement basis at a face value of Rs 10,000".
This, however, would be subject to certain conditions like the issuer should appoint at least one merchant banker, and non-convertible debentures and non-convertible redeemable preference shares be plain vanilla, interest or dividend-bearing instruments.
Sebi said that credit enhancements would be permitted in such instruments.
With respect to General Information Document (GID), which is valid as on the 'effective date of the circular', Sebi said the issuer may raise funds through tranche placement memorandum or Key Information Document at a face value at Rs 10,000 provided at least one merchant banker is appointed to carry out due diligence in respect of such issuances.
"Necessary addendum shall be issued by such issuer to the shelf placement memorandum or General Information Document, as applicable," it added.
In October 2022, the Securities and Exchange Board of India (Sebi) reduced the face value of corporate bonds to Rs 100,000 from Rs 1,000,000.
‘Mule accounts’ brought under PFUTP norms
Sebi has notified changes to include ‘mule accounts’ in its Prohibition of Fraudulent and Unfair Trade Practices (PFUTP) Regulations. “Mule account includes a trading account maintained with a stock broker or a demat account or bank account linked with such trading account in the name(s) of a person, where the account is effectively controlled by another person, whether or not the consideration for transactions in the account are paid by such other person,” said Sebi.