Sebi to simplify IPO form

If the capital market regulator’s thrust on primary market reform continues unabated under the new chairman, one could soon see a simplified form for applying in public issues. Also on the agenda is a common form for Application Supported by Blocked Amount (Asba) and non-Asba applicants.

These issues were discussed at the last board meeting of the Securities and Exchange Board of India (Sebi) held on February 7 wherein the regulator made ASBA mandatory for all non-retail applicants in a public issue from May 1 onwards.

Sebi introduced the concept of Asba for public issues in September 2008, with an aim to bring down the time for primary market issuance process. Under Asba, the applicant can submit his/her bid even as the money stays in his/her bank account. The account is debited only at the time of allotment. This helps in eliminating delays due to refunds, thereby speeding up the whole process.

“Sebi has been receiving suggestions to simplify the IPO application forms as well as to prepare a common application form for Asba and non-Asba applications. Apart from streamlining the process, this would result in considerable efficiency gains for the entire system,” say the board agenda papers available on Sebi website. The matter is being actively considered for expeditious implementation, it added. It is believed that a common form for Asba and non-Asba applicants will lead to a drastic fall in the overhead costs involved in an IPO process. It will also enhance the penetration level of Asba, as forms are seldom available in Tier-II and Tier-III cities. Though forms have been made available on the websites of the stock exchanges, awareness is still an issue.

The regulator is also in advanced stages of modifying the Asba mechanism, wherein brokers can directly enter the applicant details in the online system provided by the stock exchanges. “The attendant modification to the existing processes and systems are now at an advanced stage of implementation,” said the agenda papers.

In other words, stock exchanges will provide stock brokers with an access to the online Asba mechanism, wherein brokers will be able to key in details like the demat account number, depository participant ID, bank account number (where money will remain blocked), PAN and the bid details.