What changed
RBI has allowed standalone PDs to join SEBI-approved stock exchanges for proprietary corporate bond trading. Previously, this was not permitted. PDs must comply with all SEBI regulations and exchange eligibility criteria.
What it means for you
This expands the scope for standalone PDs to participate in the corporate bond market, potentially deepening liquidity. Banks and lenders may see improved price discovery and market activity in corporate bonds as PDs bring their trading expertise.
What you must do
- Ensure your PD entity meets SEBI's regulatory norms before applying for exchange membership.
- Review and comply with all eligibility criteria and rules of the respective stock exchanges.
- Update internal compliance and risk management frameworks to cover corporate bond trading on exchanges.
Who it affects
Standalone Primary Dealers, SEBI-approved stock exchanges, Corporate bond market participants
Can standalone PDs trade corporate bonds for clients under this permission?
No, the permission is specifically for proprietary transactions only, not for client trading.
Do PDs need separate approval from RBI for exchange membership?
The circular does not mention any additional RBI approval; PDs must comply with SEBI norms and exchange rules directly.