Sebi clarifies on mode of payment for settlement of trades on RFQ platform

Capital markets regulator Sebi on Monday said payment mechanisms provided by banks and payment aggregators can be used for settlement of trades in the debt securities executed on the request for quote (RFQ) platform of stock exchanges.

This is in addition to the existing payment mechanism of Real-Time Gross Settlement (RTGS) provided by banks, the Securities and Exchange Board of India (Sebi) said in a circular.

As a matter of practice, presently, stock exchanges are using RTGS channel as a mode of settlement for trades executed on the RFQ platform with respect to listed corporate bonds, commercial paper, and securitised debt instruments.

The clarification came after stock exchanges and market participants sought clarification as to whether payment mechanisms other than RTGS provided by banks or payment aggregators can be permitted for settlement of trades executed on the RFQ platform.

"It is clarified that in addition to the existing payment mechanisms, payment mechanisms provided by banks/ payment aggregators authorised by Reserve Bank of India, from time to time, may be used for settlement of trades executed on the RFQ platform," Sebi said.

The circular will come into force with immediate effect.

In November, Sebi came out with registration and regulatory framework for online bond platform providers stipulating that all the orders with respect to listed debt securities placed on an online bond platform would be mandatorily routed through the RFQ platform of the stock exchange(s) and settled through the respective clearing corporations.

Prior to that, the regulator permitted stock brokers registered under the debt segment of the stock exchange to place bids on the RFQ platform on behalf of client, in addition to the existing option of placing bids in a proprietary capacity.

Also, the regulator had modified the face value of the listed debt security and non-convertible redeemable preference share issued on private placement basis traded on a stock exchange or OTC basis from Rs 10 lakh to Rs 1 lakh.