Mumbai: The Securities and Exchange Board of India (SEBI) announced that its board has approved a proposal aimed at shortening the period for listing shares on exchanges following initial public offerings (IPOs). Under the new ruling, the listing duration will be reduced from six days to three.
SEBI stated that this move will benefit both issuers and investors. Issuers will receive their securities in a shorter timeframe, while those not allotted securities will have their funds refunded more quickly. Additionally, this decision is expected to help curb illicit kerb trading activities.
The revised timeline of T+3 days will be implemented in two phases. It will be voluntary for all public issues opening on or after September 1, 2023, and subsequently become mandatory for all public issues opening on or after December 1, 2023. In the current six-day process, the registrar finalizes the basis of allotment in T+3, which will now be revised to T+1, on or before 6 pm.
SEBI highlighted that this move will ensure that the resources of stakeholders such as banks, stock exchanges, and brokers are deployed for a shorter period. During a press conference, Madhabi Puri Buch, Chairperson of SEBI, explained that this change aims to expedite the entire process. By facilitating quicker fund disbursement to issuers and faster refunds to non-allottees, time and money will be saved.
Buch emphasized that reducing the listing time to three days is a pioneering initiative globally and expressed confidence that it will proceed without any glitches, as all market participants have thoroughly tested its applicability.
The decision was made following extensive back-testing and simulations conducted by various stakeholders, including stock exchanges, sponsor banks, the National Payments Corporation of India (NPCI), depositories, and registrars, to evaluate the impact on the different activities involved in the public issue process.
Previously, the issuer submitted a listing application to stock exchanges for trading permission on T+5. Under the new guidelines, this step will be completed on or before 6:30 pm on T+2.