The Securities and Exchange Board of India on 9th December 2021 has directed portfolio management services (PMS) to undertake minimum 10% of their monthly secondary market trades in corporate bonds through the Request for Quote (RFQ) platform of stock exchanges.
All transactions in corporate bonds (CBs) wherein PMS is on both sides of the trade shall be executed through RFQ in one-to-one (OTO) mode. However, any transaction entered by PMS in CBs in one to many mode (OTM) which gets executed with another PMS, shall be counted in OTM mode.
The rule will come into effect from April 1, 2022. Accordingly, from the month of April 2022, PMS shall ensure that at least 10% (by value) of their secondary market trades in CBs in current month and immediate preceding two months (i.e. February 2022, March 2022 and April 2022) are executed by placing/seeking quotes through OTO or OTM mode of RFQ. Further, for the month of May 2022, the secondary market trades executed in CBs in the months of March 2022, April 2022 and May 2022 shall be considered for the purpose of aforesaid calculation.
