Sebi examining feasibility of corporate bond ETF: Ajay Tyagi – The Economic Times

Clipped from: https://economictimes.indiatimes.com/mf/mf-news/sebi-examining-feasibility-of-corporate-bond-etf-ajay-tyagi/articleshow/84666712.cmsSynopsis

Investor flows into financial markets through ETFs has witnessed a gradual increase over the past few years. The proportion of ETF Assets Under Management (AUM) to total mutual fund AUM increased from 2% at end of FY16 to 9% at end of FY 21.

Mumbai: The Securities and Exchange Board of India (Sebi) is planning to introduce corporate bond exchange traded fund (ETF) in an attempt to boost activity in the corporate bond market.

“Sebi is examining how to increase ETF liquidity on exchange platforms and the feasibility of introducing new ETF products,” said Sebi chief Ajay Tyagi while addressing a virtual event organised by NISM on capital markets. “Globally, ETFs have emerged as popular products and provide liquid exposure to investors on even relatively illiquid underlying assets.”

Tyagi said ETFs with very low total expense ratio, as compared to actively managed mutual funds, seem to be attracting domestic investors.

Investor flows into financial markets through ETFs has witnessed a gradual increase over the past few years. The proportion of ETF Assets Under Management (AUM) to total mutual fund AUM increased from 2% at end of FY16 to 9% at end of FY 21. From ?1.54 lakh crore at beginning of FY21, ETF AUM has almost doubled to ?2.9 lakh crore at end of FY21.

Tyagi said Indian securities markets are entering a new era with several new-age tech companies preferring to list domestically.

“Our markets offer as attractive a fund-raising proposition as any overseas market. Recent filings and public offerings reflect the maturity of our market to accept the business model of new-age tech companies, which aren’t amenable to valuation through conventional metrics of profitability,” the Sebi chief said.

“Successful IPOs (initial public offerings) of such companies are likely to attract more funds in domestic markets; thus creating a new ecosystem of entrepreneurs and investors,” he added.

During FY21, companies raised ?46 billion through IPOs as compared to ?21.4 billion in FY20. In FY22, until June end, companies have already raised ?12 billion, and from the number of new filings with Sebi, it is expected that the figures will increase significantly going forward, the Sebi chief said.

Last week, online food aggregator Zomato raised $1.2 billion through an initial public offering. Digital payment companies Paytm and Mobikwik too have filed prospectus with the regulator for IPOs.

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