SEBI Plans Pilot Project for Tokenization of Corporate Bonds for Faster Settlements

Tuhin Kanta Pandey, chairman of the Securities and Exchange Board of India (SEBI), announced on Tuesday that SEBI has chosen to begin a pilot project for the tokenization of corporate bonds using Distributed Ledger Technology (DLT).

The project is anticipated to take 6 to 9 months to complete. The SEBI Chairman stated that the market regulator has begun a pilot stage project to determine if corporate bonds can be traded and settled using DLT technologies and tokenization based systems, speaking to the media on the margins of the CareEdge Debt Market Summit in Mumbai, as per the reports.

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Regarding talks with the Reserve Bank of India (RBI) on corporate bonds, Pandey stated that the RBI has already published draft guidelines on the subject and is expected to issue the final framework soon. He further stated that SEBI and the exchanges are ready to go forward after the RBI has granted its approval.

He says the pilot project will be deployed on a small scale before broader adoption is contemplated. He pointed out that while DLT technologies are currently utilized in some fields, such as depositories and covenant monitoring, SEBI is now looking into how the corporate bond market’s operations might be enhanced by using the same technology. According to Pandey, tokenization may help improve liquidity in the corporate bond market and facilitate automated and quicker settlements.