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FPIs resist mandatory 10% debt trade on RFQ

Mint Mumbai

|

July 28, 2023

Lobby group says the Sebi move won't enhance liquidity in debt markets

- Pavan Burugula

FPIs resist mandatory 10% debt trade on RFQ

India’s foreign portfolio investors (FPIs) have opposed a recent proposal by the market regulator that requires offshore funds to place at least 10% of their secondary market bond trades through the Request For Quote (RFQ) platform.

In a consultation paper floated on 5 July, the Securities and Exchange Board of India (Sebi) said the move would ensure enhanced transparency in the bond market and improve liquidity. RFQ is a centralized trading platform launched by the stock exchanges. However, since foreign funds operate in more than one country, they typically use global trading platforms such as Bloomberg, Marketaxess and Tradeweb to place their fixed income bets.

In response to Sebi’s consultation paper, FPI lobby group Asia Securities Industry and Financial Markets Association (ASIFMA) said mandating foreign funds to use platforms like RFQ won’t increase liquidity in debt markets, adding improving ease of access to the debt market for FPIs instead will attract more flows.

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