Brief Overview:
The Securities and Exchange Board of India (“SEBI”) has issued a consultation paper proposing changes to the existing regulatory framework for Online Bond Platform Providers (“OBPPs”).
Technical Details:
A brief overview of the proposals by SEBI is provided below:
1) Broader access to IFSCA regulated financial products
SEBI proposes to allow OBPPs to offer financial products regulated by the International Financial Services Centres Authority (“IFSCA”).
This framework is aligned with the existing framework applicable to stockbrokers operating in International Financial Services Centres (“IFSC”), facilitating cross‑border offerings while ensuring appropriate regulatory safeguards.
2) Inclusion of Section 54EC Bonds (now Section 85 Bonds) for tax efficiency
SEBI proposes to allow OBPPs to offer bonds issued under Section 85 of the Income Tax Act, 2025 (erstwhile Section 54EC of the Income Tax Act, 1961) on their platforms. SEBI has prescribed that OBPPs shall provide detailed disclosure such as lock‑in periods, investment limits and issue size on their platform. These bonds are typically issued by government backed entities and are exempt from listing, thereby making it ambiguous if OBPPs could offer the same.
OBPPs shall also provide a disclaimer stating that these are tax-saving instruments and all grievance in relation to such instruments does not fall under the purview of SEBI and shall be directly addressed by the issuer of such instruments.
3) Harmonization of compliance officer mandates
The framework in relation to compliance officer is proposed to be harmonized with the framework applicable to stockbrokers in accordance with the SEBI regulations.
Takeaways:
SEBI seeks to expand product range by allowing IFSCA‑regulated instruments and tax‑saving bonds on the online bond platforms. Overall, the proposals aim to scale bond participation by different classes of investors, widen access to global markets and align OBPPs with broader market intermediaries.
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