Sebi halves IPO listing time to 3 days; can it benefit both investors, issuers?

The Securities and Exchange Board of India (Sebi) on Wednesday has halved the IPO listing timeline to three days from existing six days. The move is likely to benefit issuers who would receive securities listed in a shorter period along with those who have not been allotted securities as they will get their money back faster, the capital market's watchdog said, explaining the rationale.

Market participants have welcomed the new listing rules from the Sebi, claiming them to be beneficial for both issuers and investors, particularly the retail and HNI investors, who have limited funds to bid for an issue. They said that the new rule is a win-win situation for all as the market's regulator is taking steps to simplify the process and to benefit the investors.

Mahesh M Ojha, AVP - Research and Business Development at Hensex Securities said that the move shall be welcomed by all categories of investors. The phased rollout of the new rules will allow the lead managers and registrars to resolve the issues faced by them during the implementation of the new rules.

He said that the move will help HNI investors, who borrow the money to bid for any issue as they shall be able to save interest paid on their application money "Due to reduced time of listing, investors shall have a cushion against any black-swan events, exterior to the markets," Ojha added.

The revised timeline of T+3 days from existing T+6 will be made applicable in two phases. The new listing timeframe will be voluntary for all public issues opening on or after September 1, 2023, and mandatory for all the issues which come on or after December 1, 2023.

"The move will save the time and resources of exchanges, merchant bankers, banks, depositories and brokers," said Mukesh Kochar, National Head - Wealth at AUM Capital Market.. "The issuer will be benefited as they will be getting the fund in lesser time at the same time investors will get their shares or refund also in lesser time.

According to Sebi, the move has been made consulting with all stakeholders including anchor investors, registrar, transfer agents, broker-distributors, banks and after stress test, it has been confirmed to be smooth, which was explained at the presser by Madhabi Puri Bach, the chairperson of Sebi.

Sebi also mandated additional disclosure requirements for foreign portfolio investors (FPIs) including mandating additional granular-level disclosures regarding ownership, economic interest and control of objectively identified FPIs meeting certain criteria and conditions. It also introduced board nomination rights for unitholders of InvITs and REITs.

The step is in the right direction and positive for the markets. The listing bound companies will have the opportunity of getting quicker access to the capital thereby smoothening the overall IPO process. Disclosure norms have become mandatory and stringent and it will enhance more transparency and clarity in the system, said Manish Khanna, Co-Founder at Unlisted Assets.

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