CIRCULAR
SEBI/HO/MIRSD/MIRSD-PoD-1/P/CIR/2023/83 June 02, 2023
To,
All Stock Brokers through recognized Stock Exchanges
Dear Sir/Madam,
Subject: Transactions in Corporate Bonds through Request for Quote (RFQ)
platform by Stock Brokers (SBs).
1. SEBI has been taking steps to increase the liquidity on RFQ platform of stock
exchanges to enhance the transparency and disclosure pertaining to trading in
secondary market in corporate bonds. Certain stipulations have been made for
transactions on RFQ platform by Mutual Funds1, Portfolio Management Services2
and Alternate Investment Funds3.
2. Similarly, it has been decided to take steps to increase liquidity on RFQ platform
vis-à-vis trading in Corporate Bonds (CBs) by SBs, as under:
a. With effect from July 01, 2023, for all the trades in proprietary capacity,
SBs shall undertake at least 10% of their total secondary market trades by
value in CBs in that month by placing/seeking quotes through one-to-one
(OTO) or one-to-many (OTM) mode on the RFQ platform of stock
exchanges.
b. Further, with effect from April 01, 2024, for all the trades in proprietary
capacity, SBs shall undertake at least 25% of their total secondary market
trades by value in CBs in that month by placing/seeking quotes through
OTO or OTM mode on the RFQ platform of stock exchanges.
c. SBs shall consider the trades executed by value through OTO or OTM
mode of RFQ with respect to the total secondary market trades in CBs,
during the current month and immediate preceding two months on a rolling
1 Circular no. SEBI/HO/IMD/DF3/CIR/P/2020/130 dated July 22, 2020 and Circular no. SEBI/HO/IMD/IMD-II
DOF3/P/CIR/2021/641 dated October 06, 2021
2 Circular no. SEBI/HO/IMD/IMD-I/DOF1/P/CIR/2021/678 dated December 09, 2021
3 Circular no. SEBI/HO/AFD/PoD/P/CIR/2023/017 dated February 01, 2023
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basis. Only trades pertaining to proprietary capacity of SBs shall be
considered for the purpose of such calculations.
d. Further, in terms of SEBI Circular SEBI/HO/DDHS/P/CIR/2022/142 dated
October 19, 2022, quotes on RFQ platform can be placed to an identified
counterparty (i.e. ‘one-to-one’ mode) or to all the participants (i.e. ‘one-to-
many’ mode). SBs are encouraged to place bids (in proprietary capacity
or for clients) on RFQ platform through OTM mode, as the same shall
contribute towards achieving better price discovery.
3. The stock exchanges are directed to:
a. bring the provisions of this circular to the notice of their members and also
disseminate the same on their websites;
b. make amendments to the relevant bye-laws, rules and regulations for the
implementation of the above provisions;
c. communicate to SEBI, the status of the implementation of the provisions of
this circular in their monthly development report; and
d. file the compliance report beginning August 2023 with the Department of Debt
and Hybrid Securities (DDHS), SEBI.
4. This circular is issued in exercise of powers conferred under Section 11(1) of the
Securities and Exchange Board of India Act, 1992, to protect the interests of
investors in securities and to promote the development of, and to regulate the
securities markets.
Yours faithfully,
Aradhana Verma
General Manager
Tel.No: 022 26449633
aradhanad@sebi.gov.in
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