In the Budget speech of 2016-17, Hon’ble Finance Minister has announced that:
“For developing an enabling eco system for the private placement market in corporate bonds, an electronic auction platform will be introduced by SEBI for primary debt offer”
To give effect to Budget announcement SEBI Board (“the Capital Market Regulator”) in its meeting held in January this year approved the concept/norms of providing for an electronic book mechanism for issuance of debt securities on private placement basis and the circular will be effective from July 1st, 2016.
This move will help in streamline procedures for issuance of debt securities on private placement basis, enhancing efficiency, transparency of the price discovery mechanism and improving liquidity in the secondary market.
“This electronic book mechanism would be mandatory for all private placements of debt securities in primary market with an issue size of Rs 500 crore and above, inclusive of green shoe option, if any” and will be optional for the issues below Rs 500 crore or if there is single investor.
The issuers will have to disclose the coupon, yield, amount raised, number of investors and category of investors to the Electronic Book Provider or to the information repository for corporate debt market, in the format as specified by Sebi.”
The Securities and Exchange Board of India (SEBI) said that Recognised Stock Exchanges would be eligible to act as Electronic Book Providers (EBPs) if have all the necessary infrastructure.
All Investors, including Institutional as well as HNIs Arrangers, are allowed to bid through this platform.
In order to facilitate compliance management, circular also provides for the roles and responsibilities of the issuer, investors, intermediaries, stock exchanges and detailed procedure for the bid.
For more information Refer the annexed Circular.