Description

SEBI warns investors against using unregistered Online Bond Platform Providers (OBPPs) that lack regulatory oversight and investor protection mechanisms.

Summary

SEBI has issued a public caution regarding unregistered Online Bond Platform Providers (OBPPs), including fintech companies and stock brokers offering such services without proper registration from Stock Exchanges. These unregistered platforms operate without regulatory oversight, lack investor protection mechanisms, and may violate the Companies Act 2013, SEBI Act 1992, and related regulations. SEBI has previously issued an interim order on November 18, 2024 against certain such entities.

Key Points

  • Certain entities including fintech companies and stock brokers are operating as OBPPs without mandatory registration from Stock Exchanges
  • Registration requirement stems from SEBI Circular No. SEBI/HO/DDHS/DDHS-RACPOD1/P/CIR/2022/154 dated November 14, 2022
  • Unregistered platforms lack regulatory oversight and investor protection mechanisms
  • Activities may violate Companies Act 2013 and SEBI Act 1992
  • SEBI issued interim order on November 18, 2024 against some unregistered entities
  • Investors urged to verify registration status before transacting

Regulatory Changes

No new regulatory changes introduced. This circular reinforces existing registration requirements for Online Bond Platform Providers established under SEBI Circular dated November 14, 2022.

Compliance Requirements

For Market Participants:

  • All market participants must ensure compliance with applicable regulatory framework before offering OBPP services
  • Must obtain registration from Stock Exchanges as mandated

For Investors:

  • Verify registration status of OBPPs before transacting
  • Deal only with SEBI-registered entities
  • Avoid transacting on unregistered online bond platforms

Verification Links:

Important Dates

  • November 18, 2024: SEBI issued interim order against certain unregistered entities
  • November 19, 2025: Date of this public caution circular (PR No.75/2025)
  • November 14, 2022: Original circular establishing OBPP registration requirements

Impact Assessment

Market Impact:

  • Increased scrutiny on fintech companies and brokers offering bond platform services
  • Potential enforcement actions against non-compliant entities
  • Market consolidation as unregistered platforms face regulatory pressure

Investor Impact:

  • Heightened awareness of risks associated with unregistered platforms
  • Need for due diligence before engaging with bond platforms
  • Protection from platforms lacking grievance redressal mechanisms

Operational Impact:

  • Entities operating without registration must cease operations or obtain proper registration
  • Registered OBPPs may see increased business as investors migrate to compliant platforms
  • Enhanced regulatory enforcement likely against violators

Impact Justification

High severity investor protection warning against unregistered platforms that may violate securities laws; requires immediate investor awareness and action