Brief Overview:
Taking a cue from mutual fund distribution, a new network of fixed income channel partners (“FICPs”) may soon help online bond platform providers (“OBPPs”) bring bonds closer to retail investors.
Technical Details:
A brief overview of the proposals by SEBI is provided below:
1) Investor Support: FICPs to help investors understand fixed income products and complete onboarding and transactions through OBPPs.
2) Accountability Stays: OBPPs to remain responsible for supervising appointed FICPs and addressing investor concerns.
3) Money Stays Online: Client funds and securities to not pass through FICPs; transactions to remain on the OBPP platform.
4) Product Restrictions: FICPs to not be permitted to distribute unregulated products or unsecured perpetual instruments such as AT1 bonds.
5) Fee Cap: The total commission, fee or brokerage charged to an investor to be capped at 2.5% of the investment value.
Comments are invited by SEBI until 11th September 2026 on the framework for FICP for a robust system.
Takeaways:
By combining the local connect of distributors with regulated online bond platforms, the proposed model could make fixed income products easier to understand and access, particularly for investors in Tier II, Tier III and rural markets. OBPPs would remain responsible for supervising these partners and protecting investors.
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