You can invest in debt using online bond platforms. Here’s how

livemint.com:

In 2022, the Securities and Exchange Board of India (Sebi) laid down several guidelines to bring online bond platforms, or OBPs, under a regulatory framework to allow retail or individual investors to buy and sell bonds in a fair and transparent manner. For example, Sebi prohibited OBPs from offering unlisted bonds, as listed bonds are required to meet tighter disclosure rules.

Here is a look at how investors can buy and sell bonds on online bond platforms, the limitations they are likely to face, and other options for investors.

Let’s look at OBPs first.

Sebi has stipulated that OBPs use exchanges' request for quote (RFQ) facility for investors to place buy or sell orders, which will be subsequently settled by the respective clearing corporations of the exchanges. In most cases, OBPs require investors to have a pre-existing demat account.

The RFQ is an electronic system that facilitates requesting and receiving of quotes for debt securities transactions. In this mechanism orders are matched with an OBP or bond seller depending on the quantity and price bid.

Technically, investors can sell their bonds on an OBP and take a premature exit, but it is not as straightforward as buying.

Also read | How to invest in corporate bonds in India?

“To exit, the investor needs to apply through an RFQ. We are one of the few OBPs that facilitate buying from clients, as well as offer OTM (one-to-many) RFQ to them when they are looking to sell," said Vishal Goenka, co-founder of IndiaBonds, which offers one of the largest basket of live bonds among OBPs.

Most OBPs offer only one-to-one RFQ mode as they are usually the buyer of the bond when an investor wants to exit. However, this doesn’t necessarily lead to best-price discovery, and exit