SEBI Issues Strong Caution Against Unregistered Online Bond Platform Providers (OBPPs)

#SEBI #InvestorAlert #OnlineBondPlatform #OBPP #BondMarket #RegulatoryCompliance #Fintech #DebtSecurities #SCORES #FinancialSafety

Mumbai: — The Securities and Exchange Board of India (SEBI) has issued a stern public caution urging investors to exercise extreme care and avoid transacting on online bond platforms that are not registered with the Stock Exchanges.

SEBI has observed that numerous entities, including fintech companies and stock brokers, are offering services as Online Bond Platform Providers (OBPPs) without the mandatory regulatory approval. This registration is required under SEBI Circular No. SEBI/HO/DDHS/…/2022/154 dated November 14, 2022.

❌ The Risk of Unregistered OBPPs

Unregistered platforms operate outside the regulatory perimeter, posing significant risks to retail investors:

• Lack of Oversight: They lack regulatory or supervisory oversight, meaning their operations are not monitored by SEBI or the exchanges.

• No Protection: They do not provide formal mechanisms for investor protection or grievance redressal (like the SCORES system).

• Legal Violation: Operating without registration may potentially violate the Companies Act, 2013, the SEBI Act, 1992, and regulations framed thereunder. SEBI has previously taken enforcement action, issuing an interim order against some similar entities in November 2024.

📜 Mandatory Registration Requirement

The November 2022 SEBI Circular mandated a strict regulatory framework for OBPPs to ensure transparency, mitigate risks, and enhance investor confidence.

Key Requirements for a Registered OBPP:

1. Stock Broker Registration: The entity must be a company incorporated in India and must register itself as a stock broker in the debt segment of a recognized Stock Exchange.

2. Product Scope: The platform must limit its offerings strictly to listed debt securities and debt securities proposed to be listed through a public offering.

3. Order Execution: All bond transactions must be routed and settled through the stock exchange mechanism (e.g., ICCL/NSCCL) to ensure transparency and mitigate settlement risk.

4. Grievance Redressal: The platform must have a mechanism to address grievances, often involving SEBI’s SCORES authentication.

✅ Investor Action: Verify and Safeguard Interests

Investors are urged to verify the registration status of the OBPPs prior to any transaction and deal only with SEBI-registered entities to safeguard their financial interests.

#SEBI #InvestorAlert #OnlineBondPlatform #OBPP #BondMarket #RegulatoryCompliance #Fintech #DebtSecurities #SCORES #FinancialSafety