Market regulator Securities and Exchange Board of India’s (Sebi’s) board on Wednesday approved a proposal to cut the time period for listing of shares on exchanges after their initial public offerings (IPOs) from six days to three.
According to SEBI, this move will benefit issuers would receive securities in shorter period along with those who have not been allotted securities as they will get their money back faster. This move is also expected to restrict kerb trading.
“The revised timeline of T+3 days shall be made applicable in two phases i.e. voluntary for all public issues opening on or after September 01, 2023 and mandatory on or after December 01, 2023,” said the market regulator after its board meet in Mumbai.
In the existing six-day process, the registrar finalises the basis of allotment in T+3 which shall now be revised to T+1, on or before 6 pm.
This move will also ensure resources of stakeholders like banks, stock exchanges, and brokers will be deployed for a shorter period, SEBI said.
SEBI chairperson Madhabi Puri Bach explained this step at a press conference held after the board meet. She said: “This move ensures the whole process is quicker, as issuers get their money, those who don’t get allotted get their money back and at the end of the day, time is money. So, this move saves time and money.”
Buch said the decision to reduce the listing time to three days is a “global first and I am sure it will also be glitchless as all market participants have tested its applicability”.
The decision comes after extensive back-testing and simulations by all stakeholders, including stock exchanges, sponsor banks, NPCI, depositories and registrars, in respect to various activities involved in the public issue process.
Earlier, the issuer made a listing application to stock exchanges for trading permission on T+5. Now, this will be done on or before 6:30PM on T+2.
In 2018, Sebi introduced Unified Payment Interface (UPI) as an additional payment mechanism with Application Supported by Blocked Amount (ASBA) for retail investors and prescribed a listing timeline of within six days of closure of the offer.
Prior to that, the listing timeline was as far as 22 days, which was shortened to 12 days.
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