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SEBI Reviews Provisions of International Securities Identification Number

SEBI Reviews Provisions of International Securities Identification Number

The ISIN or International Securities Identification Number is a unique 12-digit alpha-numeric code that determines specific security across the world. It has become the fastest standard securities identification number code in the world. The ISIN numbers are allocated by the country’s respective national numbering agency. By assigning the security with an ISIN number, it becomes universally recognisable. The allocated number helps the institutional investors track their investment consistently from worldwide markets.

In a measure to deepen and boost the liquidity in the corporate bond market, it was observed by SEBI that capping the ISINs will reduce the fragmentation in the primary market and increase the liquidity in the secondary market. Henceforth, the present circular is issued by SEBI to further cap the number of ISINs maturing in a financial year for debt securities issued on a private-placement basis.

What are the changes brought under the revised circular of the International Securities Identification Number?

The issuance of the present circular has replaced Paragraphs (1), (2) and (3) of Chapter 8 of the operational circular dated 10th August 2021. It is stated that the following shall comply with regard to International Securities Identification Numbers for debt securities issued on a private-placement basis.

  • The maximum number of 14 ISINs maturing in any financial year is allowed to an issuer of debt securities. Moreover, a further 6 ISINs shall also be available to the authorised issuer under Section 54EC of the IT act for issuing capital gain tax debt securities on a private placement basis.
  • The 14 ISINs shall be bifurcated in the manner provided below:
    • The 9 ISINs maturing in a financial year are allowed to plain vanilla debt securities. Further, the issuer can issue secured and unsecured debt securities within 9 ISINs. However, if the total outstanding amount of the 9 ISINs maturing in the financial year exceeds Rs 15,000 Crore, in that case, an additional 3 ISINs shall be permitted to be matured in the same financial year.
    • The remaining 5 ISINs maturing financial year shall be available to market-linked debt securities and structured debt securities.
  • The maximum number of 9 ISINs is allowed to mature in a financial year for the issuer who issues only structured or market-linked securities.
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What is the applicability date of the revised circular?

The provisions of the circular shall be made effective from 1st April 2023 for the International Securities Identification Numbers utilised to issue debt securities. However, the newly capped limits shall not be applicable till 31st March 2023 for ISINs utilised for the issuance of debt securities and due for maturing in a later year.

Moreover, for the debt securities issued on or after 1st April 2023, it is mandatory that all ISINs corresponding to these issues (including ISINs issued before 1st April 2023) and maturing in any financial year shall stick to the limit specified in the revised circular.

The circular further through below illustration explains the application of the circular:

Date of Issuance of listed SecuritiesYear of MaturityNumber of ISINs maturing in the Financial YearValue of outstanding listed debt securities (in INR)  Applicability of this circular
Upto 31stMarch 2023FY 2024-202511Any amountThe limits specified in the circular shall not apply. Moreover, the issue can issue one more new ISIN maturing in FY 2024-2025. Reissuance can be made under the existing ISINs.
1st April 2023 onwardsFY 2029-20307Less than Rs 15000 Cr.The limits specified in the circular shall apply. Further issuer can utilise 2 new ISINs maturing in the FY 2029-2030. Reissuance can be made under the existing ISINs.
1st April 2023 onwardsFY 2029-20309Less than Rs 15000 Cr.The limits specified in the circular shall apply. Issuer cannot new ISINs maturing in the FY 2029-2030. Reissuance can be made under the existing ISINs
1st April 2023 onwardsFY 2029-20309More than or Equal to Rs 15000 Cr.The limits specified in the circular shall apply. Issuer cannot 3 new ISINs maturing in the FY 2029-2030. Reissuance can be made under the existing ISINs

What are the directions to Stock Exchanges and Depositories in the revised circular of the International Securities Identification Number?

The revised circular of the International Securities Identification Number states that the stock exchanges[1] and depositories have to perform the below-mentioned functions:

  • Amend their bye-laws, regulations and rules for the implement the above provisions.
  • Change their system according to the provisions of the current circular.
  • Publishes the circular on their website.
  • Intimate to SEBI about the implementation of the provisions of the circular.
  • Issuer companies are liable to monitor the compliance of the circular.
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Conclusion

The International Securities Identification Number provides a uniform way of providing a unique number to security. Simply put, an ISINS number helps identify security across world platforms and makes it universally recognisable. The SEBI, through this circular, has modified the ISINs for debt securities issued on a private placement basis. It is further stated that an issuer of debt securities could issue a maximum number of 14 ISINs. Moreover, out of the 14 ISINs, 9 ISINs shall be used for plain vanilla debt Securities, and 5 ISINs shall be used for market link and structured debt securities.

SEBI-has-decided-to

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