Two online bond platforms set to apply for stock broker licence in January post SEBI's new rules

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Two online bond platforms, Wint Wealth, and Grip Invest, are set to apply for stock broker licence with market regulator Securities and Exchange Board of India (SEBI) to comply with the new rules that require firms engaging in bond trading to register with the regulator, at least three people told Moneycontrol on December 28.

Yubi Invest, another online bond platform, has already applied for licence on November 2, 2022, Moulik Patel, Chief Business Officer of the company, said.

SEBI, on November 11, introduced the regulations for online bond platforms selling listed debt securities. According to the rules, no person or company shall act as an online bond platform provider without a certificate of registration as a stock broker under the SEBI (Stock Brokers) Regulations.

"We are in the process of applying for the licence. We will file the application in January. Currently, we are working with our advisors on the application and are waiting to get more clarity before applying," said Nikhil Aggarwal, Founder & CEO, Grip Invest.

Anshul Gupta, Co-Founder of Wint Wealth, said, "We are in the process of completing the compliance work for the application and will be applying for licence next month (January)."

Industry experts said more applications are likely in January as the deadline is in February 2023.

Will these regulations benefit?

As per experts, the new regulations will likely deepen the secondary corporate bond market, allowing more retail participation.

"These regulations by SEBI are industry-friendly and will allow more retail participation in the bond market, which was mostly dominated by institutional investors," Gupta added.

Patel of Yubi Invest said that these regulations will wipe out the grey areas, giving it regulatory oversight, which will help generate trust among the investors.

Usually, the unregulated market or platforms don’t have any entry barriers, which leads to confusion among investors about the credibility of the company they are dealing with.

The new regulations will provide confidence to the investors regarding the manner in which their investments are handled.

Also Read: SEBI’s bond-platform regulations may help develop fixed-income market: Experts

What do the regulations say?

According to the rules, no person shall act as an online bond platform provider without a certificate of registration as a stock broker under the Securities and Exchange Board of India (Stock Brokers) Regulations, 1992.

Such persons shall comply with the conditions of registration and such other requirements as may be specified by the Board from time to time.

"Online bond platforms provider means any person operating or providing an online bond platform. Online bond platform means any electronic system, other than a recognised stock exchange or an electronic book provider platform, on which debt securities, which are listed or proposed to be listed, are offered and transacted," SEBI said in a notification.

On September 30, SEBI had decided to introduce a regulatory framework to facilitate providers of online bond platforms selling listed debt securities.

The capital market regulator said that an online bond platform provider without a certificate of registration on or prior to the date of regulations coming into force may continue to do so for a period of three months from the date of regulation coming into force or such other time period as may be specified by the Board, or if it has made an application for a certificate of registration within the specified period, till the disposal of such application by the Board.