SEBI Chair Tuhin Kanta Pandey states derivatives on corporate bonds will aid investor risk management and deepen liquidity. Regulator plans stakeholder consultations to roll out Union Budget proposals like market-making frameworks and total return swaps, boosting India's corporate bond market growth.
Core Developments
SEBI Chairperson Tuhin Kanta Pandey highlighted that introducing derivatives on corporate bonds will empower investors with advanced risk management tools, addressing liquidity gaps in secondary trading. Corporate bonds now comprise 60% of bank credit to industry, up from 40%, yet lag global peers like China due to limited issuers and lower-rated bonds. This move aligns with efforts to expand the ₹56 lakh crore market through better yield curves and retail education.
Key Highlights
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Derivatives to enhance trading depth and secondary market activity.
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Recent retail investment threshold cut to ₹10,000 from ₹1 lakh.
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Push for more issuers, A-rated bonds, and OTC market reforms.
Implementation Path
SEBI will engage stakeholders on Budget 2026 proposals, including market-making with fund access and corporate bond index derivatives. Collaboration with RBI continues to align settlement systems, fostering institutional and foreign inflows for resilient debt markets.
Sources: Reuters (RTRS, RVRS), The Hindu BusinessLine, Business Standard, Moneycontrol.