SEBI Bond Tokenisation Pilot & FPI Onboarding Simplified
Digital bond interface in an Indian financial market setting
Key Highlights
SEBI launches bond tokenisation pilot for efficiency & simplifies FPI onboarding. Explore shared ledgers, smart contracts, and enhanced investor protection in India’s debt market.
The Securities and Board of India (SEBI) is set to launch a pilot project for bond tokenisation, aiming to boost market accessibility and efficiency. Concurrently, the regulator has simplified the onboarding process for foreign portfolio investors (FPIs).
Pilot for Bond Tokenisation
This initiative, developed in coordination with the Reserve Bank of India (RBI), will explore shared ledgers. The goal is to facilitate simultaneous security and money transfers, which can streamline settlements.
SEBI aims to reduce reconciliation costs through this pilot. It will also investigate the feasibility of automating coupon payments and other servicing events using smart contracts.
SEBI Whole-Time Member Amarjeet Singh clarified that the project’s objective is not to establish a new trading market. Instead, it seeks to improve the operational dynamics of the existing bond market.
Enhancing Investor Protection in Debt
In efforts to bolster investor safeguards, SEBI is consulting on a ‘Credit Risk-o-Meter’ for debt securities. This tool will provide a standardized, color-coded visual scale mapped to existing credit-rating symbols.
The ‘Credit Risk-o-Meter’ will be prominently displayed in offer documents and on sales platforms. This aims to offer clearer risk assessment for investors.
The regulator also plans to introduce a framework for fixed income channel partners. These partners will function similarly to mutual fund distributors, expanding the reach of the corporate bond market.
These channel partners will be certified through the National Institute of Securities Markets. They are specifically prohibited from handling client funds or charging investors separately for their services.
Simplifying Foreign Portfolio Investor Onboarding
SEBI has further eased the onboarding process for foreign portfolio investors by permitting digitally signed Power of Attorney submissions to their custodians. This measure eliminates the previous requirements for notarisation, apostillisation, or consularisation.
This simplification significantly reduces the time needed for FPI onboarding. It directly improves the overall ease of doing business for FPI applicants.
The move forms part of SEBI’s broader strategy to reduce compliance burdens. These efforts are designed to enhance business ease for FPIs operating within the Indian market.