SEBI comes out with operational framework for transactions in defaulted debt securities
                     SEBI comes out with operational 
framework for transactions in 
defaulted debt securities
INTRODUCTION
 In a bid to mitigate economic distress faced by bond issuers 
in wake of COVID-19 pandemic, market regulator SEBI has 
allowed transactions in defaulted debt securities and put in 
place operational framework for such transactions.
Source: businesstoday.in
Investors to allow transactions in 
debt securities
 The Securities and Exchange Board of India (Sebi) has taken 
this decision after receiving representations from market 
participants and investors to allow transactions in debt 
securities where redemption amount has not been paid on 
maturity.
Source: businesstoday.in
Distressed fund 
 Enabling this could help develop a distressed market in India 
in the future. A distressed fund can be sold the stressed asset 
at marked-down valuations.
Source: bloomberg.com
Operational Framework 
 After detailed consultation with various stakeholders 
including market participants, investors, Debentures Trustee, 
Stock Exchange, Depositories etc., it has been decided to 
introduce an operational framework for transactions in 
defaulted debt securities.
Source: businesstoday.in
Implementation of framework 
 The regulator has directed exchanges, depositories and 
debenture trustees to put in place necessary systems and 
infrastructure for implementation of this framework by June 
29 and the new guidelines will come into force from July 1.
Source: businesstoday.in
Payment obligations
 Within two working days from the date of intimation from 
issuer or debenture trustee(s) that issuer has defaulted on its 
payment obligations, the depositories in co-ordination with 
stock exchanges shall update the ISIN master file and lift 
restrictions on transactions in such debt securities.
Source: taxguru.in
What is ISIN?
 ISIN or International Securities Identification Number is 
used for uniquely identifying securities like stocks, bonds 
warrants and commercial papers.
Source: businesstoday.in
Off-market transfers 
 Depositories impose restriction on off-market transfers on 
redemption date. This restricts transfers on and after the 
redemption date of the debt paper.
Source: businesstoday.in
Covid-19 outbreak
 The measures are among the other steps that the market 
regulator has taken in the aftermath of the Covid-19 
outbreak, to give some relief to market participants.
Source: financialtime.com
Rating agencies 
 In March, the regulator said that rating 
agencies should also use their discretion to 
check if a default was solely on account of the 
lockdown or because of procedural delays in 
availing of the moratorium allowed by the 
Reserve Bank of India. 
Source: moneycrashers.com