Four online bond platforms were recently subject to severe action by the Securities and Exchange Board of India (SEBI) for operating without the required registration. It was discovered that these platforms were providing the public with unlisted non-convertible debentures (NCDs) while disregarding legal requirements. SEBI’s action is intended to safeguard investors and uphold the securities market’s regulatory integrity.
The Platforms Involved:
The following platforms are impacted by SEBI’s order:
AI Development: AltGraaf’s owner and operator
Texterity: Linked to altGraaf as well
Tap Invest’s owner : Purple Petal Invest.
Berkelium Technologies: Stable Investments’ Operator
The Issue:
According to SEBI’s inquiry, these platforms were selling securities to a variety of investors while evading laws by arranging their offers to seem like private placements. This strategy exposed investors to possible dangers by obfuscating the distinction between public and private assets.
Regulatory Action:
SEBI has instructed these platforms to stop providing securities for sale on their platforms and to stop offering them for public subscription. The regulator cautioned against the unbridled expansion of such unapproved platforms and underlined the significance of regulatory control in safeguarding public investments.
Impact on the Market:
Four online bond platforms were recently prohibited by the Securities and Exchange Board of India (SEBI) for operating without the required registration. Significant market ramifications result from this action, especially for issuers and investors in unlisted non-convertible debentures (NCDs).
Reaction of the Market
The market responded right away with relief as well as worry. While some investors viewed this as an essential measure to maintain market integrity, others were concerned about the safety of their assets. Significant funding was made possible by AltGraaf, Tap Invest, and Stable Investments; altGraaf alone raised more than ₹4,400 crore.
Effect on the Issuers
In order to raise money, NCD issuers must now look for registered intermediaries. This change may result in a more stringent screening procedure and higher compliance expenses. On the other hand, it guarantees a safer and more transparent marketplace.
Long-Term Market Well-being
In the long run, SEBI’s intervention will help create a more stable and healthy market. SEBI safeguards public investments and avoids any risks linked with unregistered platforms by demanding stringent regulatory compliance. This action promotes improved issuer and platform practices, which is advantageous to entire market.
SEBI’s Concerns:
SEBI’s main worry was that these platforms were allowing the public to purchase unlisted NCDs issued through private placements, which are considered public issues under the Companies Act. The strict compliance and transparency requirements for public offerings, such as acquiring credit ratings and designating registered intermediaries like merchant bankers and debenture trustees, were circumvented by this approach.
Conclusion:
Investor protection and market integrity are guaranteed by SEBI’s prohibition on unregistered online bond platforms. A transparent and safe market has short-term drawbacks, but they are outweighed by its long-term advantages.
