Capital markets regulator Sebi on Thursday clarified corporate bond transactions by alternative investment funds (AIFs) through a Request For Quote (RFQ) platform.

In its notification, the Securities and Exchange Board of India (Sebi) clarified that all corporate bond transactions involved in AIF would be executed on a “one-to-one” basis through the RFQ platform.

However, any transaction entered by an AIF in a corporate bond on a “one-to-many” basis, if executed with another AIF, will be counted as a “one-to-many” basis rather than a “one-to-one” basis.

This will come into effect from April 1, 2023. Quotes or bids on the inquiry platform can be issued to designated counterparties one-to-one or all participants in a one-to-many form.

According to the norms, AIFs must undertake at least 10% of corporate bonds’ total secondary market transactions (by value) by quoting them on the RFQ platform within a month.

RFQ is an electronic platform that enables multilateral negotiations on a centralised online trading platform and completes transactions through straight-through clearing and settlement processing.

In February 2020, with the approval of Sebi, the NSE and BSE launched the RFQ platform as an extension of their existing trade execution and settlement platforms to enhance the transparency of “off-exchange” transactions of bilaterally negotiated corporate bonds.

The platform provides participants with various options for seeking and responding to quotes while maintaining an audit trail of all interactive quote yields, mutually agreed prices and terms of trade.