SEBI decides to limit IPO listing time to 12 days from May 1, 2010
In a bid to reduce market risk for investors, capital market regulator SEBI (Securities Exchange Board of India) decided to reduce the timeline between public issue closure and listing of shares to 12 days from existing 22 days. The proposed move also intends to make the existing public issue process more efficient and reduce pre-listing manipulation. Companies will also be benefitted by this move as they will receive the IPO funds in their accounts sooner. This will be applicable to public issues opening on or after May 1, 2010. The new process would require syndicate members to capture all data relevant for the purposes of finalising the basis of allotment while uploading bid data in the electronic bidding system of the stock exchanges. To ensure that the data captured is accurate, syndicate members would be permitted to an additional day to modify some of the data fields entered by them in the electronic bidding system.
SEBI release said, ‘Registrar to the issue is required to validate the bids and finalise the basis of allotment only on the basis of the final electronic bid file provided by the stock exchanges.’
Merchant bankers believe that market infrastructure has to be upgraded to enable the system to cope up with the new move. Merchant bankers say to speed up the allotment process, they should be allowed to download the information about the investors from the depositories which will reduce the physical work of transferring data from hard copy to soft copy.
From May onwards, merchant bankers will be more accountable in the IPO exercise as the market regulator has asked lead managers and their agents to resolve investor grievances, apart from being responsible for the accuracy of the data entry.
SEBI’s move holds importance as the primary market is on the revival path and many IPOs are slated to hit the market in the coming months. It is noteworthy that in November 2009, the SEBI Chairman, C B Bhave had expressed concern regarding the timeline between public issue closure and listing of shares as delay in listing is a risk that investors and issuers carry. The market regulator is also mulling to reduce the timeline to seven days.
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Category: IPO, Stock-News
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