Sebi paves way for listing of securitised debt instruments

Stock market regulator Sebi on Thursday allowed the listing of securitised debt instruments or certificates on exchanges, a decision that will boost the country's debt market.

Sebi came out with 'Listing Agreement for Securitized Debt Instruments' and said that the move would help improve the secondary market liquidity for such instruments.

Securitisation involves pooling of financial assets and the issuance of securities that are re-paid from the cash flows generated by these assets.

Common assets for securitisation include credit cards, mortgages, auto and consumer loans, student loans, corporate debt, export receivable and offshore remittances.

"With a view to enhance information available on the public domain on performance of asset pools on which securitised debt instruments are issued, it has been decided to put in place a Listing Agreement for securitised debt instruments," Sebi said in a circular.

The listing agreement for securitised debt instruments shall come into force with immediate effect, added the Securities and Exchange Board of India (Sebi) circular.

The Sebi regulations issued in 2008 provided for issuance and listing of securitised debt instruments by a special purpose distinct entity (SPDE).

"Today's announcement will stimulate primary market and will gradually help in opening of secondary market for debt instruments," SMC Globals Head (Research) Jagannadham Thunuguntla said.

It will help bring in transparency in listing of securitised debt instruments as the issuers will now need to disclose information of three levels.

"The listing agreement provides for disclosure of pool level, tranche level and select loan level information," Sebi said.

The regulator also allowed the SPDEs which are already listed and come out with frequent issues of securitised debt instruments to file "umbrella offer documents", on the lines of shelf prospectus.