SEBI Circular on Minimum percentage of trades carried out by mutual funds through RFQ platform

Mutual funds must conduct at least 10% of their total secondary market trading in Corporate Bonds through the RFQ platform of stock exchanges, according to EBI circular SEBI/HO/IMD/DF3/CIR/P/2020/130 dated July 22, 2020.

In order to boost liquidity on exchange platforms further, para 1(A)(i) of the aforementioned SEBI circular is updated as follows, based on the suggestions of the Mutual Fund Advisory Committee (MFAC).

a. On a monthly basis, Mutual Funds must place/seek quotes through one-to-many mode on the Request for Quote (RFQ) platform of stock exchanges for at least 25% of their total secondary market trades by value (excluding Inter Scheme Transfer trades) in Corporate Bonds. and

b. Mutual Funds must now place/seek quotes in Commercial Papers through one-to-many mode on stock exchanges’ Request for Quote (RFQ) platform on a monthly basis, accounting for at least 10% of their total secondary market trades by value (excluding Inter Scheme Transfer trades).

The percentages mentioned above will be calculated on a rolling basis using the average of secondary trades by value over the previous three months.

All other conditions outlined in the preceding circular remain in effect.
Mutual Funds is authorised to accept the Contract Note from brokers for transactions conducted on the RFQ platform in the One to One (OTO) and One to Many (OTM) modes.

Circularity’s applicability

With effect from December 1, 2021, this circular will be in force.

This circular is issued in the exercise of the powers conferred on the Securities and Exchange Board of India under Section 11 (1) of the Securities and Exchange Board of India Act 1992, read with Regulation 77 of the Securities and Exchange Board of India (Mutual Funds) Regulation, 1996, to protect the interests of investors in securities and to promote, develop, and regulate the securities market.