MONEY
SEBI launches liquidity window facility for investors in debt securities
- IBJ Bureau
- Oct 17, 2024
The SEBI on Wednesday introduced a liquidity window facility for investors in the debt securities through a stock exchange mechanism.
The liquidity window facility allows investors holding listed debt securities to sell them back to the issuer using a put option on specific dates, ensuring liquidity.
This facility, available from November 1, will be of immense utility to investors, especially retail investors, and can serve to enhance their investment in such debt securities, the SEBI has said in a circular.
The regulator has observed that corporate bonds are seen as illiquid because many institutional investors hold them until maturity, leading to low trading activity. To improve liquidity, especially for retail investors, the SEBI has introduced a framework where issuers can offer liquidity window facility.
Under this, issuers can choose whether to offer this facility for debt securities at the time of issuance. It applies to new issuances of debt securities, either through public offers or private placements.
The SEBI has said that the facility requires board approval and monitoring by the Stakeholders’ Relationship Committee (SRC) or an equivalent board-level committee. It must be transparent, objective, and non-discriminatory towards eligible investors, the market regulator has added.
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