CIRCULAR
SEBI/HO/AFD/PoD/P/CIR/2023/017 February 01, 2023
To,
All Alternative Investment Funds
Sir/Madam,
Sub: Transaction in Corporate Bonds through Request for Quote (RFQ)
platform by Alternative Investment Funds (AIFs)
1. To increase the liquidity on RFQ platform of stock exchanges and to enhance
the transparency and disclosure pertaining to trading in secondary market in
Corporate Bonds, SEBI has, in past, prescribed stipulations for transactions on
RFQ platform by Mutual Funds1, Portfolio Management Services2 and Stock
Brokers3.
2. Considering the above and taking into account the recommendations of the
Alternative Investment Policy Advisory Committee (AIPAC), it is stipulated that
AIFs shall undertake at least 10% of their total secondary market trades in
Corporate Bonds by value in a month by placing/seeking quotes on the RFQ
platform.
3. Further, in terms of SEBI Circular SEBI/HO/DDHS/DDHS_Div1/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). In this regard, it is clarified that all transactions in Corporate Bonds
wherein AIF(s) is on both sides of the trade shall be executed through RFQ
platform in ‘one-to-one’ mode. However, any transaction entered by an AIF in
Corporate Bonds in ‘one-to-many’ mode which gets executed with another AIF,
shall be counted in ‘one-to-many’ mode and not in ‘one-to-one’ mode.
4. The aforesaid requirement shall come into force with effect from April 01, 2023.
5. This circular is issued with the approval of the competent authority.
6. 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 market.
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 SEBI/HO/DDHS/DDHS_Div1/P/CIR/2022/142 dated October 19, 2022
7. The circular is available on SEBI website at www.sebi.gov.in under the
categories "Legal framework - Circulars" and "Info for - Alternative Investment
Funds”.
Yours faithfully,
Sanjay Singh Bhati
Deputy General Manager
Tel no.: +91-22-26449222
ssbhati@sebi.gov.in