Last updated: June 29, 2023, 3:31 PM IST
The board of directors of the Securities and Exchange Board of India (Sebi’s) on Wednesday approved a proposal to shorten the time period for shares to be listed on exchanges after their initial public offerings (IPOs) from six to three days.
According to SEBI, this move will benefit issuers who would receive securities in a shorter period of time, along with those who were not allocated securities, as they get their money back more quickly. This move is also expected to curb trade.
“The revised timeline of T+3 days will be made applicable in two phases, i.e. voluntary for all public offerings opening on or after September 1, 2023 and mandatory on or after December 1, 2023,” the market regulator said after its board meeting in Mumbai.
In the existing six-day process, the registrar completes the allocation basis in T+3, which will now be revised in T+1, on or before 6:00 PM.
This move also ensures that resources from stakeholders such as banks, exchanges and brokers are committed for a shorter period of time, according to SEBI.
SEBI Chairman Madhabi Puri Bach explained this move at a press conference after the board meeting. She said: “This move makes the whole process go faster because issuers get their money, those who don’t get their money get their money back and at the end of the day, time is money. So this step 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 go smoothly as all market participants have tested its applicability”.
The decision comes after extensive back-testing and simulations by all stakeholders including exchanges, sponsor banks, NPCI, custodians and registrars regarding various activities involved in the public offering process.
Previously, the issuer applied for listing with exchanges for trading authorization at T+5. Now this happens on or before 6:30 PM on T+2.
In 2018, Sebi introduced Unified Payment Interface (UPI) as a supplementary payment mechanism with Application Supported by Blocked Amount (ASBA) for retail investors and mandated a listing timeline of within six days of closing of the offer.
Before that, the list’s timeline was a whopping 22 days, which was shortened to 12 days.
