The Securities and Exchange Board of India (SEBI) has issued a Circular on Transaction in Corporate Bonds through Request for Quote (RFQ) platform by Alternative Investment Funds (AIFs). The Circular was issued on 1st February, 2023 and shall be effective from 1st April, 2023.
SEBI stipulates that AIFs shall undertake at least 10% of their total secondary market trades in Corporate Bonds by value in a month by placing/seeking quotes on the RFQ platform.
Quotes on RFQ platform can be placed in teh follwoing to manners:
- to an identified counterparty (i.e. ‘one-to-one’ mode) or’
- to all the participants (i.e. ‘one-to-many’ mode).
However, all transactions in Corporate Bonds wherein AIF(s) is/are on both sides of the trade must be executed through RFQ platform in ‘one-to-one’ mode. Nonetheless, any transaction entered by an AIF in Corporate Bonds in ‘one-to-many ’mode which gets executed with another AIF, will be counted in ‘one-to-many’ mode and not in ‘one-to-one’ mode.