SEBI Mandates Electronic Book Platform for Private Debt Issues Above ₹20 Crore

To make fundraising smoother and more transparent, SEBI, the Securities and Exchange Board of India, requires companies to use the Electronic Book Platform (EBP) for all private debt placements over ₹20 crore. Why does this matter? It's all about making the bond market more efficient and fair for everyone involved.

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Lowering the Threshold for Mandatory EBP Usage

Until now, companies only had to use the EBP if they were raising ₹50 crore or more. But SEBI just lowered that bar to ₹20 crore. This means more debt deals will need to happen on this digital platform. The idea is to bring consistency to how these deals are done and to shine a brighter light on the whole process.

Enhancing Market Efficiency and Transparency

So, what exactly is the EBP? Think of it as an online auction house for debt securities. Investors bid electronically, which helps set fair prices and cuts down on shady backdoor deals. With the new rule covering more minor issues, SEBI hopes to level the playing field and reduce the gap between those with insider info and everyone else. Plus, less manual work means fewer chances for mistakes or mischief.

Operational Reforms and Investor Protections

The regulator didn't just lower the threshold. It also rolled out new features to improve how EBP works:

Bidding Priorities: Now, bids with the best yield win. If more than one bid has the exact yield, the one that came in earlier gets priority. Still, if there's a tie, it's shared out proportionally.

Multiple Bids Allowed: Investors can now submit several bids for a single issue, which means more flexibility and more ways to participate.

More Providers: Depositories can now run EBPs, too, so it's not just stock exchanges anymore. This expands the network and boosts system capacity.

Easier Payments: You can now pay through a clearing corporation or the issuer's escrow account. Settlements happen one or two days after the issue date (T+1/T+2).

Addressing the 'Fastest Finger First' Concern

SEBI also tackled a long-standing complaint, speed bidding. Some investors with lightning-fast software were winning bids just by being quicker. Not anymore. SEBI now says it's all about the best bid, not the fastest. Plus, bidders must confirm they're not using unfair tech tricks to get ahead.

Implications for Market Participants

If you're a company looking to raise funds, you'll need to familiarize yourself with the EBP process, even for minor issues. It might take some getting used to, but it should make things easier and more transparent in the long run.

This is good news if you're an investor, especially an institutional one. You'll have more visibility, fairer pricing, and a better shot at landing solid investments.

And for the market itself? These changes strengthen the foundation, provide more platforms to work with, create better payment systems, and enforce stricter checks to keep things fair.

Future Outlook

SEBI's latest move shows it's serious about reforming India's corporate bond space. Leaning into tech and tightening operations sets the stage for a bond market that's bigger, smarter, and more inclusive. As these reforms roll out, everyone involved will need to adjust. But the long-term payoff? A market that works better for everyone.