Zerodha, Angel One get SEBI approval to offer corporate bonds
What's the story
Leading brokerage firms Zerodha and Angel One have received approval from the Securities and Exchange Board of India (SEBI) to offer corporate bonds on their platforms. The companies are currently testing the product and features internally, with plans to launch them in the coming months. This move comes after Groww, India's largest brokerage firm by active investors, launched its bond platform in May.
Market trends
Bond platform gaining traction
Groww has been selling bonds worth nearly ₹200 crore every month since launching its bond platform.
Another major brokerage firm, Dhan, is also expected to launch bonds on its platform in a few months.
The bond marketplace is licensed under SEBI's online bond platform provider scheme, and nearly 40 firms have received regulatory approval since 2023.
User focus
Regulatory measures enhancing accessibility
Angel One's Chief Business Officer for Direct Business, Arief Mohamad, said their focus is on providing the safest and most reliable products to users. He added that they are working toward rolling this out in the coming months.
Zerodha's head of passive investment products, Neelesh Verma, also emphasized that key regulatory measures have made bonds significantly more accessible to retail investors.
Future prospects
Comprehensive suite of investment instruments
Verma revealed that Zerodha is working on enabling both primary public issues of bonds and secondary trading of listed bonds directly on Kite.
He said the firm aims to offer a comprehensive suite of investment instruments so users can diversify across asset classes and build their portfolios as they see fit.
Despite being in its nascent stages, the bond market has grown seven times in the last financial year.
Growth challenges
Bonds remain a niche segment in India
Verma acknowledged that bonds remain a niche segment in India with low retail awareness compared to equities.
He said predicting the market potential of the bonds market is difficult.
Over the last two years, increased market volatility and lower returns have pushed most consumers to look beyond equities for higher returns, making corporate bonds an addition to the expanding suite of fixed-income products.