Sebi reduces face value for debt securities to boost corp bond market liquidity

On Friday, Sebi decreased the face value of debt securities and non-convertible redeemable preference shares issued on a private placement basis from Rs 10 lakh to Rs 1 lakh in order to increase liquidity in the market for corporate bonds.Following representations from various market participants, including issuers, requesting a review of the denominations, the regulator took the action.

Additionally, non-institutional investors view the high ticket size as a barrier to their access to the corporate bond market.According to a circular issued by Sebi, more investors will be able to participate in the corporate bond market if the face value and trading lot are reduced.

The regulator stated that “shall be Rs 1 lakh” for each non-convertible redeemable preference share or debt security issued through private placement.Each debt security or non-convertible redeemable preference share issued on a private placement basis has a face value of Rs 10 lakh, and the trading lot is equal to that amount.