The Securities and Exchange Board of India (SEBI) has issued a Consultation Paper on May 16, 2018 with a view to determine uniform methodology for pricing of non-traded and thinly traded non convertible debt securities.
The proposed methodology has been framed keeping in mind the fact that pricing illiquid debt securities is as much an art as science, hence making the process completely objective may neither be possible nor is desirable. Further, the idea is of providing uniformity to the process, while not taking away the judgement of a pricing agency.
The framework proposes to streamline the process flow and various variables used within the framework for pricing, this is to ensure that market players will be confident of these pricings, will believe in its accuracy and rely on it for transacting. Further, it is felt that with fairly consistent reference price, market participants will have a starting point to begin trading these debt securities and this ultimately may act as a catalyst to spur trading volumes.
Accordingly, the SEBI has proposed to have a uniform methodology for pricing of non-traded and thinly traded NCDs, which is placed at Annexure- A of the Consultation Paper (Page 5) for public comments.
Public comments are invited on the proposed framework by email or through post, latest by June 18, 2018.