Categories: Economy

SEBI Releases Uniform Format for OTC Trades In Non-Convertible Securities

Capital markets regulator SEBI came out with a uniform format for reporting over-the-counter (OTC) trades in listed non-convertible securities. 

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Why This Development:

The development comes after Sebi observed that information on OTC trades in listed non-convertible securities provided to the stock exchanges by the investors is incomplete and inaccurate.

This, in turn, amounts to incorrect and distorted information being displayed on the exchanges’ websites.

What Has Been Said:

“In order to address the issue, it has been decided all OTC trades shall be reported in a uniform format,” the Securities and Exchange Board of India (Sebi) said in a circular.

Need Of This:

Under the format, information pertaining to deal type — whether brokered or direct — ISIN, listed or unlisted security, issuer name, coupon rate, issue description, traded price, traded yield, trade date and time, settlement date, settlement status and reported trade executed on RFQ (Request For Quote) platform will have to be disclosed.

The new guideline would come into force from January 1, 2023. Sebi asked stock exchanges to monitor the compliance of the guideline and bring to the notice of the regulator periodically, discrepancies in reporting of OTC trades by investors.

How The OTC Worked:

OTC trades are generally trades executed between two market entities without others being aware of the price at which the transaction was effected.

Piyush Shukla

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