SEBI's Debt Securities Allotment Charges
                      
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
SEBI Issues Circular for Contributions by Eligible 
Issuers of Debt Securities to the Settlement 
Guarantee Fund of the Limited Purpose Clearing 
Corporation for Repo Transactions in Debt Securities 
On 13th April 2023, the Securities and Exchange Board of India 
(SEBI) issued a circular in regard to contributions by eligible 
issuers of debt securities to the Settlement Guarantee Fund of the 
Limited Purpose Clearing Corporation for repo transactions in debt 
securities. 
 
A well-functioning repo market contributes to the development of 
the debt securities market, inter alia, by way of boosting the 
liquidity of the underlying debt securities and providing a facility 
to market participants to monetise their debt holdings without 
selling the underlying, thus meeting their temporary need for 
funds. The development of an active repo market in debt securities 
may also be beneficial to the Issuers as the enhanced liquidity may 
positively impact the yield, thereby resulting in reduced costs of 
raising funds for the issuers in the primary market. 
 
The SEBI Board, in its meeting held on 29th September 2020, 
permitted the setting up of a Limited Purpose Clearing Corporation 
(LPCC) for clearing and settling repo transactions in debt 
securities. The Board, inter alia, also decided that an amount of 0.5 
basis points of the issuance value of debt securities per annum be 
collected upfront prior to the listing of such securities in order to 
build the Settlement Guarantee Fund of the LPCC. 
 
In this regard, AMC Repo Clearing Limited (ARCL) has been granted 
recognition as LPCC by SEBI. The Reserve Bank of India also 
accorded necessary approvals to ARCL to function as a Clearing 
Corporation with a limited purpose and to offer central 
counterparty services for repo transactions in debt securities. 
 
It has been decided to put in place the following framework for the 
upfront collection of amounts as charges from eligible issuers at 
the time of allotment of debt securities - 
 
 
The eligible issuers shall be notified by the LPCC as per its risk 
management policy. 
 
 
An amount of 0.5 basis points of the issuance value of debt 
securities per annum based on the maturity of debt securities 
shall be collected by the Stock Exchanges and placed in an 
escrow account prior to the allotment of the debt securities. 
This amount is applicable on a public issue or private 
placement of debt securities under the SEBI (Issue and Listing 
of Non-convertible Securities) Regulations, 2021. 
 
 
Stock Exchanges shall transfer the amounts so collected to the 
bank account of the LPCC within one working day of the receipt 
of the amount and inform the details of the same to the LPCC. 
The details of the amounts so collected shall also be disclosed by 
the Stock Exchanges on their websites. 
 
 
The above-mentioned charges shall be collected on the basis of 
Actual/ Actual. The LPCC shall provide an illustration of the 
calculation of the amounts to be contributed by the eligible 
issuers. 
 
 
The provisions of this circular are to come into force for the offer 
documents filed on or after 01st May 2023 for private placement/ 
public issues of debt securities by such eligible issuers as specified 
by the LPCC. As mentioned earlier, the LPCC shall issue a circular 
accordingly to operationalise the same. 
 
This circular is issued through the exercise of powers as conferred 
under Section 11(1) of the Securities and Exchange Board of India 
Act, 1992, to be read with Regulation 55(1) of SEBI (Issue and Listing 
of Non-convertible securities) Regulations, 2021 in order to protect 
the interests of investors in securities and to promote the 
development of, and to regulate the securities markets. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Sushree Dash 
 
 Legal Researcher 
Official Notification Attached Here 
Existing FFMCs/Non-Bank AD Category-II are directed to 
register themselves on the APConnect application within three 
months from the date of issue of this circular, through the 
weblink indicated above. Subsequent to registration on 
APConnect, requests for various other facilities/approvals 
listed above and submission of returns by the entities are to be 
done through the APConnect application. The FFMCs and Non- 
Bank AD Cat-II are to adhere to the instructions issued by the 
Reserve Bank of India, in this regard, from time to time. 
 
On receipt of confirmation from the Regional Office of the 
Reserve Bank regarding the generation of license through 
APConnect, the existing FFMCs/n]Non-Bank AD Cat-II shall 
surrender their existing license to the respective Regional 
Office of the Reserve Bank. 
 
Eligible entities, desirous of applying for fresh FFMC/Non-Bank 
AD Category II/MTSS Agent Licence/Authorisation are to 
henceforth submit their application only through APConnect. 
 
The directions contained in this circular are issued through the 
exercise of powers as conferred under Section 10(4) and Section 
11(1) of the Foreign Exchange Management Act, 1999 (42 of 
1999) and are without prejudice to permissions/approvals, if 
any, required under any other law.