India's securities market regulator has issued a crucial warning to retail investors about unauthorized online bond trading platforms operating without proper registration. The Securities and Exchange Board of India (SEBI) has identified several entities, including fintech companies and stockbrokers, that are providing bond-dealing services outside the regulatory framework.
The Regulatory Crackdown on Unregistered Platforms
SEBI observed that certain entities are offering services as Online Bond Platform Providers (OBPPs) without obtaining mandatory registration from stock exchanges. This development comes even as digital platforms have made corporate bonds more accessible to individual investors in recent years. The regulator emphasized that these unregistered operators function outside the regulatory perimeter and lack proper investor protection mechanisms.
The market watchdog stated in its Wednesday notice that such platforms do not offer any investor protection framework or grievance-redress mechanism, potentially exposing investors to significant risks. Currently, there are only 18 registered OBPPs authorized to facilitate online corporate bond transactions for retail participants.
SEBI's Regulatory Framework and Compliance Requirements
SEBI introduced a comprehensive framework for online bond platforms in November 2022 to ensure proper regulation in this growing segment. The regulator mandated that all OBPPs must register as stockbrokers in the debt segment of stock exchanges to operate legally in India.
Despite this regulatory framework, SEBI noted that several players continue to operate without registration, potentially violating the Companies Act, the SEBI Act, and various regulations governing securities distribution. The regulator revealed that it had passed an interim order in November 2024 against some entities for offering unauthorized corporate bond trading services to retail investors.
Investor Protection and Market Impact
SEBI has urged investors to exercise extreme caution and avoid transacting on unregistered online bond platforms. The regulator advised investors to verify the registration status of OBPPs before conducting any transactions and deal exclusively with SEBI-registered entities to safeguard their interests.
Registered OBPPs have played a significant role in enhancing retail participation in India's bond market by simplifying access to these instruments. According to a 2025 Ernst and Young report, these platforms have democratized the bond market, making bond purchases as accessible and transparent as equity trading for retail investors.
Industry participants have welcomed SEBI's cautionary notice. Suresh Darak, founder of Bondbazaar, an online bond platform, commented that "after SEBI's regulation in 2022, not a lot of platforms are selling bonds without registration. I think it is just a precautionary notice."
Darak added that registered OBPPs display their SEBI registration numbers on their websites, and investors should look for this crucial identifier before investing. The absence of a SEBI registration number indicates that the platform is operating without regulatory approval.
