The capital markets regulator Securities and Exchange Board of India (Sebi) is trying to shorten the gap between an initial public offering (IPO) and the listing of shares to three days from the current six days, according to two people familiar with discussions held by the regulator.
The matter was discussed at a meeting between Sebi officials and market intermediaries late last month, they said.
Reducing the time between an IPO and listing of shares helps limit risks related to market volatility, which may emerge within that period, and would bring closer to developed markets like the US where the time between an IPO and listing of shares is as low as one day.
Attempts to streamline processes come at a time when the primary markets have picked up steam.
In 2015, 21 companies raised Rs.13,614.08 crore through IPOs— the highest in five years. So far in 2016, seven companies have tapped primary markets to raise close to Rs.3,200 crore, and an additional two dozen companies with valid Sebi approvals are waiting to launch their IPOs, the data showed.
“In a meeting with market intermediaries, Sebi discussed the idea of bringing down listing time to three days and various ways in which this could be achieved. It was an informal, knowledge-sharing exercise as the regulator is keen on expanding the reach of our markets,” said one of the persons cited above on condition of anonymity.
An email sent to Sebi on Monday was not answered.
In November, Sebi halved the listing time for all IPO transactions opening on and after 1 January to T+6 from T+12. (T denotes the closing date of an issue and the number represents business days in listing shares on exchanges). The system was introduced with the objective of reducing costs as well as time associated with an IPO.
Discussions are now underway to move to a T+3 system.
Merchant bankers and corporate lawyers say that a further reduction in listing time would benefit the markets but add that this would involve a significant overhaul in the prevailing systems.
“Reducing listing time will particularly help QIBs (qualified institutional buyers), who bid for significant quantities of shares and deposit full money for their bids, by unblocking capital faster in cases where bids are only proportionately accepted for allotment. The earlier regime of accepting margin money from QIBs has been long abolished. However, the process will not be easy and will require synchronization among market intermediaries like brokers, ASBA (applications supported by blocked amounts) banks and depository participants (DPs),” .
Lawyers also explained that there are numerous procedures involved in an IPO and said that the regulator will have to simplify each step to achieve its goal of a quicker listing.
These processes include manual filing of application forms in some cases, filing of prospectus with the RoC (Registrar of Companies), verification of electronic bid details by exchanges, ASBA fund verification and the final allotment and permission to trade following submission of documents.
Company Secretary GAURAV SHARMA+919990694230 Connect on Watts App with Gaurav Email us [email protected] Official Blog Fema India Experts Connect with our Facebook Page:- Click and Like our Page Subscribe our Email updates like other 21,000 Members, Free/Easy/Comfortableway
