Companies going for IPOs next month onwards will get listed on the stock market much sooner than previous ones. This is because India¡¯s market regulator SEBI has announced that it has halved the timeline for listing of IPOs from existing T+6 days to T+3 days, i.e. listing will be done just 3 days after the issue¡¯s closing date.?
The new rules shall be applicable on a voluntary basis for public issues opening on or after September 1, 2023, and will become mandatory for public issues opening on or after December 1, 2023.
SEBI?(Securities and Exchange Board of India), as per its?circular?dated August 9, 2023, announced the following changes:
1. Consequent to extensive consultation with the market participants and considering the public comments received pursuant to the consultation paper on the aforesaid subject matter, it has been decided to reduce the time taken for listing?of specified securities after the closure of the public issue to 3 working days (T+3 days) as against the present requirement of 6 working days (T+6 days); ¡®T¡¯ being the issue closing date.
2. The T+3 timeline for listing shall be appropriately disclosed in the Offer Documents of IPOs.?
3.?The timelines for submission of applications, allotment of securities, unblocking of application monies, and listing shall prominently be made a part of pre-issue, issue opening, and issue closing advertisements issued by the Issuer for public issues in terms of SEBI.??
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SEBI seems to have a lot on its plate at present, with India's market regulator planning to take many big decisions that would impact the market in more ways than one. The key decisions expected to be taken by SEBI in the near future, include:
Instantaneous Settlement
SEBI is examining the possibility of a mechanism for an instant settlement of trades for investors in cases where both parties to the trade have made 100% early pay-in of funds and/or securities.
A working group has already been constituted to examine the feasibility and operational modalities of the same, as per the ET report.
Upstreaming of clients¡¯ funds
SEBI has proposed a framework for upstreaming clients¡¯ funds from stockbrokers to clearing corporations to ensure that no client funds are retained by the brokers. The framework is proposed to be implemented in a phased manner.
Fraud Detection
The regulator plans to amend the current stock broker regulations to provide surveillance of trading activities and internal controls, obligations of notified stock brokers?and their employees, escalation and reporting mechanisms, and a whistle-blower policy.
Regulation For Index Providers
SEBI is in the process of introducing a regulatory framework for index providers, mainly aligned with the IOSCO principles, in order to bring in greater transparency. Currently, index providers function outside the regulatory purview.
The regulator has in principle received approval from the board for the introduction of the regulations.
Blocked Amount
As part of its efforts to safeguard investors from a possible default by a broker, Sebi has decided to introduce a supplementary process for trading in the secondary market based on blocked funds. Mitigating the risks associated with the transfer of the entire fund upfront to the trading member, blocked funds will provide enhanced protection of cash collateral to investors.
"The said facility shall be provided by integrating the RBI-approved Unified Payments Interface (UPI) mandated service of single-block and multiple-debits with the secondary market trading and settlement process," SEBI had said.
Secondary Market Development
With a view to enhancing the oversight of market infrastructure institutions such as exchanges and clearing houses by assessing their functioning and regulatory requirements, As per the ET report, SEBI took various initiatives in 2022¨C23. It plans to further strengthen it in the current year, including the development of software utilities.
It has also been proposed to develop a framework for evaluating the performance of such institutions across various parameters, which will bring them greater accountability.
Takeover Regulations
SEBI has formed a committee to review the current takeover regulations to simplify and strengthen the existing norms by benchmarking global practises.
Delisting Pricing Mechanism
SEBI plans to review the pricing mechanism in the event of the delisting of shares from exchanges and explore alternative options to determine the exit price for a stock.?Currently, the price discovery for delisting shares is done through a reverse book-building process. SEBI also plans to review the compulsory delisting framework adopted by the stock exchanges.
Digital Assurance
Given the increasing availability of external sources for information on listed entities, SEBI would mandate digital assurance concerning financial statements disclosed by listed entities.
Compliance Cost
Reducing the cost of compliance is something?SEBI chairperson Madhabi Puri Buch has often highlighted at public events. The regulator plans to begin a comprehensive review of various existing regulations to facilitate the development of markets and the ease of doing business.
Derivatives Market
The market regulator also plans to review the eligibility criteria for the?inclusion of stocks in the derivatives segment. The current regulations were last reviewed by the regulator in 2018. As per the report, SEBI?is also looking at strengthening the existing framework for?price?bands for stocks traded in the derivatives segment to reduce volatility and manage risks effectively.
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