Sebi mulls expanding definition of QIB for debt securities


NEW DELHI: Capital markets regulator Sebi on Tuesday proposed expanding the definition of a qualified institutional buyer (DEGREE) for investments debentures with the aim of increasing the provision of funds to the issuers of such securities.
The regulator suggested including certain categories of investors QIB segment such as Sebi regulated companies as well as multi-state cooperatives with net assets in excess of Rs.500 crore.
The QIB category should include pension funds, bank finance and home finance companies, small finance banks, reinsurance companies, refinancing agencies such as MUDRA, and universities, among others.
The proposed move would increase the potential investor base for debt issuers and help further develop debt markets, Sebi said in its consultation paper.
The Securities and Exchange Board of India (Sebi) has solicited public comment on the proposals as of May 29.
In its consultation paper, the regulator noted that many investors with large capital, financial know-how and the ability to evaluate investment opportunities have emerged. For the same reason, there are also existing institutions that could be recognized as QIBs.
Such investors can help provide issuers with the funds they need by subscribing to debt or non-convertible securities and increase the depth of the bond market, Sebi said.
In addition, the regulator found it necessary to consider parity for certain categories of Indian investors Foreign portfolio investorsincluded in the present definition of QIB.
Noting that QIBs are significant investors in debt securities, Sebi said the broadening of the definition for investing in debt securities will serve to broaden the types, classes and categories of investors, access to primary issuance investment opportunities at the improve the electronic debt securities platform and help create a level playing field in the debt securities market.
As part of the proposal, Sebi said such a company must provide self-certification that it has the necessary expertise and skills to value investments in debt instruments, conduct risk management and conduct due diligence in the form to be determined and make them available to the exchange before you start investing as a QIB.
Such firm may either have a designated officer or committee composed of persons with the requisite knowledge and skills, or may engage an independent registered investment adviser, portfolio manager or commercial banker on an ongoing basis to provide valuation, risk management advice and/ or in due course instruct diligence, said Sebi.
However, the company should take full responsibility for any debt investments it makes from time to time, he added. PTI SP

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