To enhance liquidity in the corporate bond market, Sebi on Friday reduced the face value of debt security and non-convertible redeemable preference share issued on private placement basis to Rs 1 lakh from the current Rs 10 lakh. The move came after the regulator received representations from various market participants, including issuers, requesting for review of the denominations.
Further, non-institutional investors consider the high ticket size as a deterrent which restricts their ability to access the market for corporate bonds. If the face value and trading lot is reduced, more investors can participate, which in turn will enhance the liquidity in the corporate bond market, Sebi said in a circular.
The regulator said the face value of each debt security or non-convertible redeemable preference share issued on private placement basis "shall be Rs 1 lakh." Under the current rules, the face value of each debt security or non-convertible redeemable preference share issued on private placement basis is Rs 10 lakh and the trading lot is equal to the face value.