New Delhi: SEBI has proposed a new liquidity window facility to enhance liquidity for investors in debt securities via the stock exchange. This initiative aims to improve market conditions, particularly for retail investors dealing in corporate bonds.
According to a draft circular released on Friday, SEBI’s proposed facility would allow issuers to offer put options on debt securities at designated dates or intervals. This would enable investors to sell their debt securities back to the issuer before maturity. The facility would apply only to new debt securities issued through public offerings or private placements that are intended to be listed.
SEBI is seeking public feedback on this draft until September 6. The draft outlines that issuers may, at their discretion, provide this liquidity window for their debt securities, based on the International Securities Identification Number (ISIN) at the time of issuance. Issuers choosing to offer this facility must first secure approval from their board of directors. For companies with listed equity, the stakeholder relationship committee will oversee the facility, while for pure debt-listed entities, the board or a designated committee will manage it. The liquidity window facility would be available only after one year from the issuance date.
Issuers are tasked with determining which investors are eligible for the facility, with potential restrictions for retail investors or broader access to all demat account holders. SEBI has proposed that the liquidity window should cover at least 10% to 15% of the total issue size, with sub-limits possible for each liquidity period and any excess demand handled proportionately.
To keep investors informed, SEBI proposes that the liquidity window remain open for three working days on a monthly or quarterly basis, as decided by the issuer. The schedule for this window must be included in the offer document, and investors should be notified at the beginning of each financial year through SMS or WhatsApp.
Issuers will need to report details of securities redeemed during each liquidity window to the stock exchange, debenture trustees, and depositories within three working days. Additionally, information about the liquidity window’s availability and usage must be accessible on the websites of stock exchanges, depositories, and debenture trustees.
