Sebi to cut listing time to 7 days, seek more retail play

Circular soon on investing electronically in IPOs through stock brokers

The Securities and Exchange Board of India (Sebi) plans to reduce the listing time for an initial public offering (IPO) from 12 days from the closure of an issue to seven days. It would issue a circular to facilitate applications for IPOs electronically — through stock brokers across many cities — soon. Those preferring not to deal with brokers may download the application forms directly from the stock exchange’s website and view the status of their applications online.

“The final touches are given to the circular for investing in IPOs through stock brokers electronically, and we are mandating banks to make the ‘applications supported by blocked amount’ (ASBA) facility available at all branches,” said a Sebi official. Investing through brokers the way one buys shares in the secondary market would enhance the reach of merchant bankers in marketing IPOs. In case retail investors’ applications are supported by banks’ blocking the application amount in investors’ accounts (ASBA), the allotment process would be hastened.

A total of 18 banks, with branches in about 1,000 areas across the country, are registered with stock exchanges. Investors from these locations would now be able to invest in IPOs through share brokers in their respective regions. “This will cover a large part of retail investors. It might also help attract more for IPOs,” said a Sebi official, adding exchanges were ready to implement the new system.

CHANGING THE GAME

• One may also download application forms directly from exchanges’ websites
• Investing through brokers to enhance reach of merchant bankers in marketing IPOs
• Investors from about 1,000 locations can invest in IPOs through share brokers
• After applying through stock brokers, shares would be allocated in investors’ accounts directly 

Currently, brokers as part of syndicated IPO investment bankers sell IPO shares and upload the forms with stock exchanges immediately. This is reflected in the book building response to the IPO on the stock exchange’s website on the same day. However, “this has remained confined to a few brokers and major cities only. Now, the facility will be available to lakhs of terminals and 1,000 locations,” said a senior official from a stock exchange.

After applying through a stock broker, the share would be allocated in investors’ accounts directly, and investors would pay the issuer company using the ASBA facility. For secondary market deals, the money is paid to brokers.

Prithvi Haldea, director, Prime Database, said, “If ASBA is made compulsory for IPO applications, the allotment process can be cut to less then seven days, and listing time can be cut to even five days.” Currently, 30 per cent of retail applications use the ASBA facility.