Sebi amends stock brokers' rule to boost liquidity in secondary market for corporate bonds
ALSO READ: Sebi allows mutual funds to expand ESG offerings. How it will impact investors' money? LPCC is an entity established to undertake the activity of clearing and settlement of repurchase agreement transactions.
Sebi expects the move will facilitate active trading, especially by market makers, by enabling them to finance their inventory of bond holdings through an active repo market. This in turn is expected to improve liquidity in the corporate bond markets.
Earlier in September 2020, Sebi's board approved a proposal to facilitate the setting up of an LPCC. Sebi also has tweaked Securities Contracts rules.
According to the new rule, in the event of a clearing member or participant failing to honor his settlement obligations, the Fund would be utilized to complete the settlement. Further, the corpus of the Fund needs to be adequate to meet the settlement obligations arising on account of the failure of a clearing member or participant.
Every recognized clearing corporation needs to establish and maintain a Fund to guarantee the settlement of trades executed in respective segments of a recognized stock exchange. With agency inputs.Get the best recommendations on Stocks, Mutual Funds and more based on your Risk profile!
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