Capital market regulator SEBI is considering a proposal for setting up a dedicated exchange for corporate bonds and fixed income derivatives, which will exclusively cater to the large institutional investors.

The exchange is proposed to be set up by ICAP India, a subsidiary of the world’s largest inter-dealer broker ICAP plc, and its application is currently being processed by the Securities and Exchange Board of India (SEBI).

When contacted, a spokesperson for the London-based ICAP plc told PTI that the application has been made to the SEBI and plans were still in the development stage.

“We can confirm we made an application and we are in that process right now. Our plans are still in development, not set in stone,” the spokesperson said in an e-mailed reply.

The spokesperson, however, did not reply to detailed queries about its plans to set up an exchange in India.

“When and if we are in a position to say more we will do so. ICAP plc is committed to the long-term growth of India’s capital markets,” the spokesperson added.

Sources, however, said that the proposed exchange would focus on the wholesale market to facilitate institutional investors such as banks, mutual funds, insurance companies and primary dealers to directly trade in corporate bonds, interest rate derivatives and fixed income derivatives, among others.

Currently, there are two national stock exchanges in the country, NSE and BSE, for equity, derivatives and various other securities, while a third bourse MCX-SX recently got SEBI’s approval to set up a full-fledged stock exchange.

Besides, there are a number of other regional and small exchanges and a few such as the United Stock Exchange for dedicated products like currency derivatives.

The proposed exchange would help the policymakers deepen and strengthen the corporate bond and derivative market.

ICAP plc is a market leader in the global money broking business with a market share of 26 per cent and daily transaction volumes exceeding USD one trillion, of which about 50 per cent is executed electronically.

In India also, ICAP is the largest inter-dealer broker in Government securities, corporate bonds and fixed income derivatives. ICAP India offers products such as interest rate swaps, overnight index swaps, Government securities, treasury bills, corporate bonds and forex forward contracts.

ICAP India has been long involved in traditional broking and is working towards an electronic trading platforms in order to better facilitate the servicing needs of its clients.

Its future electronic expansion plans include interest rate swaps, forex forward contracts and corporate bonds.

Globally, ICAP is active in wholesale markets in interest rates, credit, commodities, forex, emerging markets, equities and equity derivatives. It is present in over 32 countries, including both developed and emerging markets.

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