The Securities and Exchange Board of India vide its notification dated 22nd July 2020 has directed the mutual funds on the monthly basis to undertake at least 10 per cent of their total secondary market trades, in terms of value, in corporate bonds on the Request for Quote (RFQ) platform of stock exchanges in order to increase the liquidity on exchange platform.
The percentage as specified shall be reckoned on the average of secondary trades by value in immediate preceding three months on rolling basis.
RFQ is an electronic platform that provides more transparency and better efficiency. It is an online trade execution and settlement platform for trading of corporate bonds, commercial papers and G-Secs, among others and all transactions in corporate bonds and commercial papers wherein mutual fund is on both sides of the trade would be executed through RFQ platform in one-to-one mode.
Further SEBI has also mandated disclosure of yields of the underlying instrument.
The circular shall come into force from 1st October 2020.
Click here to read the notification.
