Bonds issued outside can get listed on IFSC exchanges: Sebi

The Securities and Exchange Board of India (Sebi) on Thursday allowed debt securities to get listed on stock exchanges in the International Financial Services Centre (IFSC) even if these are issued elsewhere, but they will have to follow all necessary listing and corporate governance norms.

Asking stock exchanges to evolve a detailed framework prescribing the eligibility criteria and other requirements for issuance and listing of debt securities on IFSCs, Sebi also allowed 'over the counter' trading of debt securities in an IFSC subject to clearing and settlement through clearing corporations within such centres.

The country's only IFSC has been set up in GIFT City near Ahmedabad, where both the BSE and the NSE have set up exchanges.

 

The debt securities that are issued in the IFSC are mandatorily required to be listed on a stock exchange within the centre. This is in addition to the mandatory listing of debt securities that are issued in IFSC.

In a circular, Sebi also said 'Person resident in India' cannot invest or trade in rupee denominated bonds issued and/or listed in IFSC, except to the extent as permitted by the Reserve Bank.

The resident Indian is also not allowed to invest or trade in any debt securities, issued or listed in IFSC by Indian entities, Sebi said.

"However, listing of only those debt securities shall be permitted which are issued in and by issuers resident in Financial Action Task Force (FATF) member jurisdictions. The issuer of debt securities shall enter into a listing agreement with the stock exchange(s) where such securities are intended to be listed," the Sebi said in a circular.

The regulator has also decided that the stock exchanges in IFSC shall evolve a detailed framework prescribing the initial and continuous listing requirements, including corporate governance, to be complied with by the issuers whose securities are listed or proposed to be listed on stock exchanges in the IFSC.

Earlier, Sebi's IFSC guidelines provided that the debt securities listed in stock exchanges should be traded on the platform of the stock exchange and such trades should be cleared and settled through clearing corporation set up in the IFSC.

The regulator has now decided to permit over the counter trading of debt securities in the IFSC subject to clearing and settlement through clearing corporations.

"It is advised that all OTC (over the counter) trades in debt securities shall be reported on the reporting platform of any one of the recognised stock exchanges in IFSC within 15 minutes of the trade," Sebi said.

The regulator also said that to ensure the data is not duplicated, the trades should be reported on reporting platform of one of the stock exchanges only.

"The reporting for a trade must be done by the buyer and the seller on the same platform to ensure matching of both sides of the trades," Sebi added.

The stock exchanges and clearing corporations also have to submit the framework to Sebi for the regulator's approval.