SEBI’s Guidelines on Product Offerings by OBPPs

June 17, 2023

The Securities and Exchange Board of India (SEBI) has recently introduced guidelines to regulate product offerings by online bond platform providers (OBPPs). These guidelines aim to ensure compliance, protect investors’ interests, and streamline the functioning of the bond market.

Restrictions on Product Offerings

SEBI’s guidelines restrict online bond platform providers from offering products other than listed debt securities on their platforms. This ensures that investors have access to transparent and regulated investment options. By focusing on listed debt securities, the guidelines enhance market integrity and reduce potential risks associated with unlisted bonds and other unregulated offerings.

Permissible Securities for Offerings

According to the circular, online bond platform providers are allowed to offer a range of securities on their platforms. These include Government Securities, Treasury Bills, listed Sovereign Gold Bonds, listed municipal debt securities, and listed securitized debt instruments. These permissible offerings provide investors with diversified options and facilitate their participation in the bond market.

Registration Requirement for OBPPs

Under the new rules, online bond platform providers are required to register as stockbrokers in the debt segment of the stock exchange. This registration ensures that OBPPs operate within a regulated framework, adhere to established norms, and maintain the necessary professional standards. By being registered as stockbrokers, OBPPs demonstrate their commitment to transparency, accountability, and investor protection.

Consequences for Non-Compliance

SEBI’s guidelines make it clear that entities acting as online bond platform providers must strictly adhere to the permissible product offerings outlined in the rules. Failure to comply with these guidelines will result in the cessation of offering such products on their platforms or any other platform website. This underscores the importance of adherence to regulatory requirements and safeguards the interests of investors.

Protecting Brand Names and Namesake

The guidelines also address the issue of unauthorized usage of an online bond platform provider’s name, brand name, or any similar name by its holding company, subsidiary, or associate for unregulated products or services. Such unauthorized usage is prohibited, ensuring that investors can trust the legitimacy of the offerings associated with the platform provider.

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