Shares will soon list in three days’ time after IPO closure

In less than a month’s time, investors could see quick listing of companies post the closure of their initial public offer (IPO). 

The Securities and Exchange Board of India (Sebi) has announced that starting September 1, companies can list their shares in three days’ time after the IPO bidding period ends. Currently, companies get a period of six days to list their shares after the public issue closes for subscription. 

“Consequent to extensive consultation with the market participants and considering the public comments received pursuant to consultation paper… it has been decided to reduce the time taken for listing of specified securities after the closure of public issue to 3 working days (T+3 days) as against the present requirement of 6 working days (T+6 days); ‘T’ being issue closing date,” stated a Sebi circular issued on Wednesday. 

While the reduced timeline will be introduced on a voluntary basis for public issues opening on or after September 1, it will be mandatory for all issues opening on or after December 1, 2023. 

This assumes significance both from a company and an investor point of view. A reduced timeline means that investor money would be blocked for a shorter duration of time while for a company, a curtailed timeline would mean lesser risks with respect to market volatility and fluctuations. 

Incidentally, the latest Sebi move is part of the regulator’s overall attempts to lower the settlement timeline for various market segments.  

The secondary markets are already following a T+1 settlement cycle while mutual funds have also switched to a T+2 cycle. Further, Sebi chairperson Madhabi Puri Buch has clarified that the regulator along with various market participants is already deliberating on an instant settlement mechanism for the Indian stock markets.