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Sebi To Allow Exchange-Traded Corp Bonds In 2009

By Reuters

  • 09 Dec 2008

India's market regulator will allow exchange-traded interest rate futures in January, and will permit exchange trading of corporate bonds to help firms raise funds locally at cheaper rates, a senior official said on Monday.

"We are on track to launch interest rate futures. It will be launched by January," T.C. Nair, a whole-time member of the Securities and Exchange Board of India (SEBI) told an industry conference.

"We are looking at an exchange-traded corporate bond market because there is more transparency and clearing of settlements," he said, adding such bonds would find appetite among investors as interest rates are softening.

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The regulator is waiting for state governments to agree on a uniform stamp duty rates for such bonds, he added.

 

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India has been trying to introduce exchange-traded bonds for three years to enable companies to raise long-term funds for big projects.

 

India needs $500 billion investment in infrastructure sector in the five year period ending March 2012 with significant private participation, but the recent global credit crisis has dried up funds abroad.

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The government and central bank announced a series of steps over the weekend including cuts in key central bank rates, a cut in excise duties on manufactured products and a $4 billion extra spending to pump-prime the economy.

Nair said the daily over-the-counter trade in corporate bonds ranges between 3 and 4 billion rupees, and this could increase with the participation of retail investors.

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Outstanding private placements in corporate bonds was to the tune of 1.2 trillion rupees, but they are not traded regularly.

 

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