The Securities and Exchange Board of India is likely to set up an exchange-traded corporate bond market in a couple of months. It will help industry to raise funds at competitive rates in a transparent manner.
"We are looking at an exchange-traded corporate bond market, because there is more transparency and manipulations are not possible," Sebi wholetime member T C Nair said after releasing an Assocham study on derivatives in Mumbai on Monday.
The Securities and Exchange Board of India (Sebi) is in final stages of putting in place the system, which is expected to become operational in a couple of months.
Nair also hinted at the possibility of a fourth exchange for currency futures in the near future. "There are some banks and financial institutions which have applied and we are considering their proposal," he said.
At present, there are three exchanges -- the BSE, NSE, and MCX -- which have trading in currency futures.
Supporting a strong domestic corporate bond market, IIFCL CMD S S Kohli said, "Developing a corporate debt market is essential for the infrastructure sector. A corporate debt market is going to be the main source of investing in infrastructure."
Unlike the corporate debt market, Nair said the market for government securities is well developed. He said the current scenario, with interest rates going down, is conducive for bond markets.
Currently, most trades in the corporate debt market happen through private placements. Setting up a bond market, tradable on exchanges, will help create a liquid market for bonds and it will enable retail investors to participate, he said.
"Now the trading is Rs 300-400 crore (Rs 3-4 billion) daily in the corporate bond market," Nair added.