SEBI halves stock listing time to three day from issue closure, experts say win-win for all stakeholders
Jun 29, 2023
New Delhi [India], June 29 : Financial market regulator SEBI's Board has approved the proposal for reducing the time period for listing of shares of a company through Initial Public Offering (IPO) from the existing 6 days to 3 days, from the date of issue closure.
The revised timeline will be made applicable in two phases -- voluntary for all public issues opening on or after September 01, 2023 and mandatory on or after December 01, 2023, SEBI said.
SEBI said the decision to halve the days follows extensive consultation with all stakeholders
"Extensive stress testing has been done to confirm that the transition to T+3 would be smooth," SEBI said in a statement.
The reduction in listing timeline is expected to benefit as issuers would receive their funds and allottees would receive their securities in a shorter time period.
Besides, it said subscribers who were not allotted shares would receive their moneys back quickly, and resources of all stakeholders -- like stock exchanges, banks, depositories, brokers in the public issue process -- will be deployed in the market for a shorter period.
"This is a welcome step taken by SEBI to reduce the listing timeline. This is a win-win for all the stakeholders. It will save the time and resources of exchanges, merchant bankers, banks, depositories & brokers. 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," said Mukesh Kochar, National Head-Wealth at AUM Capital Market on SEBI's move.
"So the cost of funds for the investors' community will come down as they will be able to redeploy the refund amount and save the interest cost if any," Kochar added.
According to Aayush Agrawal from AVP-Merchant Banking, Swastika Investmart Ltd, "With the new system in place, issuers will receive the proceeds from IPOs promptly, enabling them to utilize the funds more efficiently for their business objectives. This accelerated transfer of funds will also benefit allottees, as they will receive their securities more swiftly, allowing them to participate in the market and potentially capitalize on investment opportunities."
Agrawal added that the shorter timeframe will bring benefits to all stakeholders involved, facilitating faster access to funds for issuers, expedited allotment of securities for investors, and quicker refunds for non-allottees.
