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SEBI proposes fixed-income distributor network for online corporate bonds
The regulator also floated tighter rules to curb sales incentives and curb mis-selling on online bond platforms.
India's markets regulator, SEBI, has proposed a framework to broaden retail access to corporate bonds by building a nationwide network of fixed-income distributors that would work with online bond platform providers.
Under the proposal, fixed-income channel partners would help investors with onboarding, documentation, KYC and transactions, while orders would be routed directly through the online bond platform. To be eligible, individual distributors would need to be Indian citizens, at least 18 years old, have passed Class 12, and hold the relevant NISM certification, with mutual fund distributors able to apply subject to the certification requirement.
SEBI said the model is designed to extend fixed-income distribution beyond major urban centers, where corporate bond participation remains more concentrated among institutions than retail investors. The regulator also outlined significant responsibilities for online bond platform providers, including due diligence on distributors, verification of enlistment and certification, training and risk-based inspections.
Separately, SEBI proposed limits aimed at preventing sales incentives from influencing recommendations. Online bond platforms would be barred from offering distributors in-kind incentives such as gift vouchers or electronic gadgets, and distributors would have to ensure that financial incentives do not determine which securities or platforms they recommend, according to a consultation paper issued on Friday.