3 more weeks to online bond platforms to register as stock brokers: Sebi

Capital markets regulator Sebi on Tuesday extended the timeline by three weeks for entities, operating as online bond platform providers, to make an application for registration as stock brokers.

The extension has been given keeping in view the technical difficulties faced by these entities, the Securities and Exchange Board of India (Sebi) said in a circular.

"It has been decided to grant an additional time period of three weeks commencing from February 9, 2023 (the end of three months from November 9, 2022) for making an application to obtain a certificate of registration as a stock broker under the Sebi (stock brokers) regulations," the markets watchdog said.

Accordingly, the application for registration by online bond platform providers (OBPPs) as stock brokers would be made by March 1, 2023.

Under the regulatory framework issued in November, Online Bond Platform Providers (OBPPs) should be companies incorporated in India and they should register themselves as stock brokers in the debt segment of the stock exchange.

Prior to that, the capital markets watchdog notified a framework for entities operating or desirous of operating as OBPPs.

During the past few years, there has been an increase in the number of OBPPs offering debt securities to non-institutional investors. Most of them are fintech companies or are backed by stock brokers.

There has been a significant increase in the number of registered users who have transacted through such OBPs.

While OBPs provide an avenue for investors, particularly non-institutional investors to access the bond market, their operations were outside Sebi's regulatory purview, the regulator had noted.

After obtaining registration as a stock broker in the debt segment of a stock exchange, an entity is required to apply to the bourse to act as an OBPP.

In its application, the entity needs to ensure that roles and obligations, technology, operating framework -- access and participation, Know Your Client (KYC) for onboarding investors and sellers and risk profiling of investors -- are complied with.