ASIC has applied its policies for trustees inconsistently and scared away participants, Melbourne Securities Corporation told the corporate bonds market enquiry.

The MSC Group provides trustee services to debenture issues, among other trustee, advisory and administration services.

It said ASIC has been inconsistent in applying its policies while approving applications to act as a trustee under the s238GB of the Corporations Act.

The section lays the requirements for trustees of unlisted debenture insurers including how much personal indemnity insurance they should hold.

MSC said it understood ASIC applied the financial requirements unevenly to only professional trustees and not traditional trustees.

"This has resulted in trustees existing the market and new trustees not willing to enter the market," MSC said in its November submission to the enquiry which was published this week.

"The need to engage with ASIC on the policy application for each application creates uncertainty on the conditions of approval and results in uncertainty for the issuer, impacting market disclosure and certainty over ability to issue and timing of issuance."

MSC also said it ASIC hasn't applied the policy consistently within professional trustees, which MSC says, led to significant detrimental impact on market participants.