SEBI's big update regarding FPI, use of RFQ platform is necessary for 10 percent of secondary transactions

Markets regulator SEBI today proposed to mandate foreign portfolio investors (FPIs) to undertake at least 10 percent of their total secondary transaction trade in corporate bonds based on prices quoted on the RFQ (Request For Quote) platform of stock exchanges.
Sebi said the proposal is aimed at increasing liquidity on the RFQ platform and enhancing transparency and disclosures related to investment in corporate bonds, which in turn will encourage investment by FPIs in the corporate bond segment.
RFQ is an electronic platform that enables multilateral negotiations on a centralized online trading platform with a straightforward process of clearing and settlement to complete the trade.
It was launched in February 2020 on BSE and NSE. Various types of debt securities are available for trading on the RFQ platform.
In its consultation paper, SEBI has proposed that FPIs may be mandated to initially undertake at least 10 percent of their total secondary market turnover in corporate bonds based on prices quoted on the RFQ platform of stock exchanges on a quarterly basis. 
SEBI has also provided similar mandates for other intermediaries such as Alternative Investment Funds (AIFs), Portfolio Management Services (PMS), and stock brokers. The Securities and Exchange Board of India (SEBI) has sought comments on the proposals by July 26.
The RFQ platform reduces information asymmetry and increases transparency in the corporate debt segment by providing disclosures such as term sheets, price information, and market quotes. This is expected to lead to better price discovery, lower costs, and ease of doing business.
During FY 2022-23, FPIs have done only 4.5 percent of their total business in corporate bonds through the RFQ platform. Further, during the year, FPIs accounted for only 0.78 percent of the total trading in corporate bonds on the RFQ platform executed by various entities.