The Securities and Exchange Board of India (“SEBI”), in powers conferred under Section 11(1) of the Securities and Exchange Board of India Act, 1992 read with Regulation 55 (1) of the SEBI (Issue and Listing of Non-convertible Securities) Regulations, 2021, vide Circular No. SEBI/HO/DDHS/DDHSPOD1/P/CIR/2025/72,[1] dated May 13, 2025 (“Circular”), introduced key changes aimed at simplifying operational processes and enhancing transparency in the corporate bond market. This Circular was issues pursuant to a review of the Request for Quote (“RFQ”) platform framework and on the recommendations of the designated working group and public consultation feedback. This Circular shall come into force with effect from August 18, 2025.
The key highlights of the Circular are as follows:
- Simplification of Yield to Price Computation on RFQ Platform
Chapter XXII of the SEBI Master Circular dated May 22, 2024, outlines provisions relating to trade execution and settlement for listed non-convertible securities, securitised debt instruments, municipal debt securities, and commercial paper on the RFQ platform. In order to simplify the yield to price computation process, it has been clarified that the cash flow dates (interest/dividend/redemption) for securities traded on the RFQ platform shall be based on the due date of payment as per the cash flow schedule and not adjusted for the day count convention.
Accordingly, a new Clause 9 has been inserted in Chapter XXII of the NCS Master Circular talking about Yield to Price Computation. In order to simplify the process of yield to price computation for non-convertible securities, cash flow dates regarding payment of interest/ dividend/ redemption for the securities traded on RFQ platform shall not be adjusted for day count convention and shall be based on the due date of payment as per the cash flow schedule, and not as per the date of payment.
- Mandatory Disclosure of Cash Flow in Corporate Bond Database
Clause 3.3.34 of Schedule I of the SEBI (Issue and Listing of Non-Convertible Securities) Regulations, 2021 requires issuers to disclose cash flow schedules in offer documents using the day count convention. However, such information is currently not captured in the centralized corporate bond database.
To address this, SEBI has mandated that issuers must now submit cash flow schedules at the time of ISIN activation in the centralized database. A new Paragraph 57 has been added to Annex XIV-A of the NCS Master Circular, detailing the format for such disclosures. The information must include:
- Particulars (Payment of interest/dividend/redemption)
- Due date
- Payment date as per day count convention
Further, in case of any change in the cash flow schedule during the life of the securities, the update must be made within 1 (one) working day.
[1]https://www.sebi.gov.in/legal/circulars/may-2025/simplification-of-operational-process-and-clarifying-regarding-the-cash-flow-disclosure-in-corporate-bond-database-pursuant-to-review-of-request-for-quote-rfq-platform-framework-_94018.html