SEBI revises OFS mechanism

February 2, 2013

Market regulator, the Securities and Exchange Board of India (SEBI), has revised the Offer For Sale (OFS) mechanism as the deadline is approaching for the promoters of listed companies to offload their stake to meet the minimum public shareholding norm of 25 % by June 2013.

As per SEBI, the revised norms:

The cumulative bid quantity will be made available online to the market throughout the trading session at specific intervals in respect of orders with 100 % upfront margin and separately in respect of orders placed without any upfront margin.
The indicative price shall be disclosed to the market throughout the trading session. This is also calculated based on all valid bid / orders.
Institutional investors have a choice to pay either upfront 100 % margin in cash or without margin. However, non-institutional investors have to pay 100% upfront margin in cash.
Orders with 100% margin paid upfront by institutional investors and non-institutional investors can be modified or cancelled at any time during trading hours.
Orders without paying upfront margin by institutional investors can’t be modified or cancelled except make upward revision in the price or quantity.
Institutional investors who placed orders / bids with 100% margin upfront, custodian confirmation would be within trading hours and settlement shall occur on T+1 (trading plus one day) and without upfront margin it will be on T+1 and settlement will be on T+2 as it is now followed in secondary market transactions.
SEBI has eliminated the extended half-an-hour time after trading hours given to the custodians.