According to a Mint Report, SEBI is trying to shorten the gap between an initial public offering (IPO) and the listing of shares to three days from the current six days.
Reducing the time between an IPO and listing of shares helps limit risks related to market volatility, which may emerge within that period, and would bring closer to developed markets like the US where the time between an IPO and listing of shares is as low as one day.
The reduced listing time means investors’ funds will get blocked for a much lesser duration.
Under the new norms, an investor will be able to submit his application to any Sebi-registered stock broker, depository participant (DP) or registrar and transfer agent (RTA) or self-certified syndicate bank (SCSB). Depositories can access the stock exchange platform and in turn provide the same to their DPs or RTAs.
At present, only brokers and SCSBs are allowed to bid on behalf of investors on the exchange platform.
Investor will continue to have the option of submitting application supported by blocked amount (Asba) application to SCSBs or stock brokers. The fast-track route may be extended to companies having an average market capitalisation of public shareholding between Rs 250 crore and Rs 3,000 crore.
Sebi chairman U.K. Sinha has publicly spoken about the concept of quicker IPO listings and has discussed the idea of bringing them on par with secondary market settlements.
The idea was also reiterated in a discussion paper released in January 2015, where Sebi proposed draft norms for electronic-IPOs (e-IPOs) and fast-track follow-on public offerings (FPOs) and rights issues, in an effort to minimize the listing timeline, boost retail participation and make it easier for companies to raise money.
