New Delhi: The Securities and Exchange Board of India (Sebi) has cautioned investors against transacting on online bond platforms that are operating without the mandatory registration prescribed under its regulatory framework.
In an advisory released on Wednesday, the markets regulator said that several fintech outfits, stockbrokers and other intermediaries have been offering bond-trading services digitally without first securing recognition from stock exchanges, despite the explicit requirement laid down under its circular dated November 14, 2022.
Sebi pointed out that such entities are effectively running outside the purview of any supervisory oversight and therefore do not provide the minimum guardrails available to investors on regulated platforms, including formal grievance-redress systems and structured investor-protection standards.
It warned that businesses operating in this fashion may be in breach of the Companies Act, 2013, the SEBI Act, 1992 and the rules built on those statutes. The regulator also recalled that it had issued an interim order on November 18, 2024 against a set of platforms functioning in a similar manner.
The framework for online bond platform providers (OBPPs), introduced in 2022, followed a sharp jump in startups and financial intermediaries attempting to distribute listed and soon-to-be-listed debt instruments directly to individuals through the web. Sebi’s rules require any such electronic interface, other than recognised stock exchanges and electronic book-building mechanisms, to register with an exchange and comply with disclosure, monitoring and investor-protection criteria.
Amid concerns over opacity, settlement risk and mis-selling in the bond distribution space, the regulator has now reiterated that investors must transact only with Sebi-registered OBPPs. Lists of approved platforms are available on the regulator’s website as well as those of the NSE and BSE. The advisory also reminded all intermediaries that no bond-related service resembling an OBPP can be offered without complete compliance with the regulatory framework.
The warning coincides with a period in which Sebi chairperson Tuhin Kanta Pandey has repeatedly emphasised the responsibilities of market intermediaries at a time of rapid financial deepening. At the Morningstar Investment Conference India earlier this month, Pandey remarked that the industry must progress beyond “check-box compliance” and actively build a market infrastructure anchored in transparency and investor safety.
Speaking days later at the CII Financing Summit on November 18, he projected that India’s investor community could double in the next three to five years, and that such expansion increases the onus on issuers and intermediaries to prioritise protection and product quality.
Market watchers view the latest advisory as a precursor to tighter supervision of platforms targeting retail participation in debt markets, an area that has seen exponential expansion in the past three years. For investors, the regulator’s message is direct: transactions executed outside Sebi-registered channels may not qualify for investor grievance redressal and could entail serious operational and legal risks. For entities facilitating online bond trades, the communication is a signal that non-compliance could invite penalties and reputational fallout. In essence, by drawing attention to unregistered platforms, Sebi has reaffirmed that the growth of the bond market cannot come at the cost of oversight, accountability and investor protection.