SEBI Proposes Fixed Income Channel Partners To Expand Bond Access In Smaller Cities

The Securities and Exchange Board of India (SEBI) on 21 August proposed a framework to introduce Fixed Income Channel Partners (FICPs) to facilitate the distribution of fixed income securities through Online Bond Platform Providers (OBPPs), with the aim of expanding access to such investments in Tier II, Tier III and rural areas.

Under the proposed framework, an FICP may be an individual or entity enlisted with a stock exchange and appointed by an OBPP to distribute fixed income securities and facilitate transactions. FICPs must meet prescribed eligibility requirements, including holding a valid NISM-Series: Fixed Income Securities Certification. Their enlistment would remain valid for three years, subject to continued compliance with the eligibility requirements and renewal.

Before appointing an FICP, an OBPP would have to conduct independent due diligence, including Know Your Distributor checks and In-Person Verification. OBPPs would also be required to supervise and monitor FICPs, provide training before onboarding and annually thereafter, protect client data, and investigate unusual or suspicious activities.

FICPs would assist OBPPs with client onboarding, documentation, Know Your Customer (KYC) procedures and transaction facilitation. However, they would not be permitted to handle client funds or securities, receive or pay money or securities in their own name, or issue documents such as deal slips, contract notes or invoices to clients.

The proposed framework would require FICPs to follow a Code of Conduct and prohibit mis-selling, aggressive sales practices and conflicts of interest. FICPs would also be prohibited from recommending fixed income products solely on the basis of financial incentives and would have to comply with the Advertisement Code applicable to OBPPs.

Under the proposed fee structure, FICPs could receive remuneration only from the OBPP that appoints them and would not be permitted to directly charge or collect money from clients. Fees, commissions or brokerage charged to clients would be capped at 2.5% of the investment value.

Stock exchanges would maintain a database of FICPs and could take disciplinary action against them, including withdrawal or cancellation of their enlistment. Complaints against FICPs would not be covered by mechanisms such as the Investor Protection Fund or Settlement Guarantee Fund.

SEBI has invited public comments on the proposal until 11 September 2026.