TaxTMI 
TaxTMI 
Registration and regulatory framework for Online Bond Platform Providers (OBPPs)
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....ticularly non-institutional investors to access the bond market, their operations were outside SEBI's regulatory purview. 3. With the bond market offering tremendous scope for development, particularly in the non-institutional space, there is a need to place checks and balances in the form of transparency in operations and disclosures to the investors dealing with such OBPs, measures for mitigation of payment and settlement risk, availability of redress mechanism in case of complaints, etc. 4. Thus, in order to streamline the operations of these OBPs and to facilitate the participation of investors in the bond market, there was a need to provide a regulatory framework for the working of such OBPs. 5. Pursuant to discussions with market participants and stakeholders, vide notification dated November 09, 2022, a framework has been prescribed for entities operating/ desirous of operating as OBPPs under regulation 51A of the SEBI (Issue and Listing of Non-Convertible Securities) Regulations, 2021 ('NCS Regulations'): 5.1. Such entity shall be a company incorporated in India and register itself as a stock broker in the debt segment of the Stock Exchange(s); 5.....
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....'entity') shall, after obtaining registration as a stock broker in the debt segment of Stock Exchange(s), apply to a recognized stock exchange to act as an Online Bond Platform Provider (OBPP) as specified under NCS Regulations. In its application, the entity shall ensure that the following requirements are met and confirmations / undertakings are provided: 1. Roles and obligations: (a) The entity has appointed a Company Secretary as a compliance officer. (b) The entity has appointed at least two qualified key managerial personnel with experience of at least three years in the securities market; Explanation I. - For the purposes of this circular, "Key managerial personnel" shall have the same meaning as assigned to it in the Companies Act, 2013. Explanation II. - For the purposes of this circular, a person shall said to be 'qualified' if he/she possesses a professional qualification in finance, accountancy, law, engineering, company secretaryship or management from a university or an institution recognized by the Central Government or any State Government or a foreign university or post-graduation in the Securities Market from National Institu....
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....third party sellers of debt securities to use the OBP to sell such securities, the entity shall, before taking up an assignment of offering of such securities on its OBP, enter into an agreement in writing with such sellers that clearly defines the inter-se relationship and sets out their mutual rights, liabilities and obligations relating to such assignments. 3.3. Know Your Client (KYC) for on-boarding investors and sellers: The entity shall comply with Know Your Client (KYC) requirements and verify the identity of its investors and sellers by requiring them to submit necessary documents undertaking necessary steps for this purpose. 3.4. Execution of orders: The entity shall ensure that: 3.4.1. All Orders with respect to listed debt securities placed on OBP are mandatorily routed through the Request for Quote platform (RFQ) of the recognised Stock Exchange(s) and settled through the respective Clearing Corporations. 3.4.2. All Orders with respect to debt securities proposed to be listed through a public offering placed on OBP shall be mandatorily routed and settled through the stock exchange mechanism. 3.5. Risk Profiling: The ....
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.... 7.1. It has a comprehensive risk management framework covering all aspects of its operations and shall ensure that risks associated with its operations are identified properly and managed prudently. 7.2. It shall have a mechanism to: (a) ensure access control for its investors and sellers and prevent unauthorised access to the OBP; (b) prevent unfair access and avoid all actual, potential or perceived conflicts of interest; (c) ensure that all transactions on the OBP, without exception, are dealt within a fair, non-discriminatory, non-discretionary and orderly manner; and (d) prevent transactions that are not in compliance with the prevailing legal or regulatory requirements. 7.3. It shall, establish appropriate controls to reduce the likelihood of erroneous transactions such as fat-finger errors, unintended or uncontrolled trading activity by investors and sellers. 8. Handling exigencies: The entity undertakes to establish appropriate safeguards and procedures to deal with exigencies like suspension or cessation of trading in debt securities, cancellation of orders or transactions by the investors and selle....