Steps taken to further expand market for Corporate Bonds

In line with the commitment made in the last year budget speech about the steps to be taken to create an exchange-traded market for corporate bond on the basis of the R.H. Patil Committee Report, both Bombay Stock Exchange and National Stock Exchange have created platforms for trading in corporate bonds. Taking a move forward to further expand the market for corporate bonds, the Finance Minister Shri P Chidambaram in the Budget proposals for the year 2008-09 in the Lok Sabha today, proposed the following:

(a). To take measures to develop the bond, currency and derivatives markets that will include launching exchange-traded currency and interest rate futures and developing a transparent credit derivatives market with appropriate safeguards;

(b) Enhance the tradability of domestic convertible bonds by putting in place a mechanism that will enable investors to separate the embedded equity option from convertible bond and trade its separately and;

(c) Encourage the development of market based system for classifying financial instruments based on their complexity and implicit risks.

The Finance Minister also proposed to extend the requirement of Permanent Account Number (PAN) to all transactions in the financial market subject to suitable threshold exemption limits. To provide a seamless national market for securities, the Finance Minister proposed to request the Empowered Committee of State Finance Ministers to work with Central Government to create a truly pan Indian market for securities that will expand the market base and enhance the revenues of the State Governments.

Source : Press Information Bureau

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