The Reserve Bank will soon put in place a clearing house mechanism for settlement of trading in corporate and other bonds, a move that will infuse transparency and encourage development of a bond market, SEBI chairman C B Bhave said today, adding that the facility is likely to be introduced in the next couple of months.

"RBI has agreed to a facility by which the money will lie with the central bank and not with banks and this system will be in place in the next couple of months," SEBI chief told reporters here.

Currently, market traders usually settle the trade in bonds bilaterally as the number of participants is small.

SEBI chief said there had been a issue of confidence among the institutions for going ahead with settlement only through a few banks as the amount involved was huge.

The new system will do away with bilateral settlement of trades and infuse transparency in the bond market. The money will also lie with the RBI during pay-in and pay-out.

Bhave does not expect the new system to increase the number of participants in the market as it is limited to institutions. However, FIIs participation up to $15 billion and the corpus from the new pension scheme will help boost bond market volumes, Bhave said.

SEBI has also come out with simplified listing norms for those companies issuing debt instruments in order to develop the primary market for corporate bonds.

''Continuing with the rationalisation of disclosure norms for listing of debt issuances, it has been decided to put in place a simplified listing agreement for debt securities,'' the market regulator said on Monday.

The revised norms has done away with detailed disclosures for companies, whose shares are already listed on the exchanges.

''Where the equity of an issuer is listed, and such an issuer seeks listing of debt securities (whether by way of public issue or private placement), minimal incremental disclosures related to the debt security issuance would be sufficient, since large amount of information is already in public domain and material developments are disclosed under the equity listing agreement on a nearly continuous basis,'' SEBI said in a release.

If the equity of an issuer is not listed, detailed disclosures need to be made, it added.