Mumbai: Market regulator Securities and Exchange Board of India (Sebi) is considering regulations to bring transactions of products which are not traded on an exchange or over-the-counter products through clearing entities.
Bringing over-the-counter (OTC) products, which comprise a majority of corporate bonds issued by private and public corporations, will ensure timely settlement of the transactions, Sebi chairman C B Bhave told reporters on the sidelines of a seminar organized by industry body Ficci here.
“Sebi is looking at the issue of bringing OTC products into the fold of clearing entities. This would help to ensure timely settlement of such transactions,” Bhave said.
Sebi has also approached the Reserve Bank of India (RBI) to request whether the facility of clearing OTC products could be done with the central banks participation, Bhave said, adding that participation of the apex bank in the clearing operations of OTC products will make market participants feel more secure.
Noting that over-leveraging of institutions in developed economies had caused chaos in the financial systems, Bhave said that the regulator was also looking at measures to ensure how leveraging will not go out of hand (in the Indian financial system).“