SEBI Cuts IPO Listing Time to Three Days

In a landmark decision aimed at streamlining the capital market operations, the Securities and Exchange Board of India (SEBI) has ushered in a new era for public issues.

Revamped Listing Time-Frame

SEBI recently announced a crucial reduction in the time period for listing shares in public issues. Moving away from the erstwhile time frame of T+6, where ‘T’ denotes the issue closing date, the regulator has now introduced a more expedited time frame of T+3. This essentially means that shares will now be listed within three days post the issue’s closure, a significant improvement from the previous six days.

Transition to the New System

While issuers have the discretion to adopt this new time frame for public issues opening up until the end of November, a mandatory shift for all public issues will be witnessed starting December 1.

Enhanced Benefits for Stakeholders

The rationale behind this modification is manifold. Primarily, both issuers and investors are set to derive substantial benefits from this adjusted timeline. For issuers, it signifies quicker access to the raised capital, thus facilitating improved business operations. Concurrently, investors are positioned to experience an early liquidity return on their investments, marking a favorable shift in the investment landscape.

Operational Specifics

SEBI has also provided clarity on certain operational specifics in tandem with this change:

• The application process concerning public issues needs to conclude by 5 pm on the designated closing date.
• A crucial subsequent step, the finalization of applications (approvals or rejections), is set for completion by 6 pm on the day following the issue’s closure, known as T+1.
• Once greenlit by the stock exchanges, funds should be debited from the investors’ ASBA (Application Supported by Blocked Amount) accounts by 2 pm on T+2 day.

Investor Protection Mechanism

Reiterating its commitment to safeguarding investor interests, SEBI has instituted a compensation provision. In instances where there’s a delay in unblocking the ASBA application funds, a compensation mechanism will be triggered, commencing from T+3.

Month: Current Affairs - August, 2023

Category: Economy & Banking Current Affairs