NEW DELHI,MUMBAI :The Securities and Exchange Board of India’s (Sebi’s) board on Wednesday approved a proposal to cut the time period for listing of shares on exchanges after their initial public offerings (IPOs) from six days to three.
The Securities and Exchange Board of India’s (Sebi’s) board on Wednesday approved a proposal to cut the time period for listing of shares on exchanges after their initial public offerings (IPOs) from six days to three.
Once implemented, the rule will enable IPO investors to receive shares within three days of the issue’s closure from the current waiting period of six days. Investors who did not receive share allotments can also expect refunds within three days.
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Once implemented, the rule will enable IPO investors to receive shares within three days of the issue’s closure from the current waiting period of six days. Investors who did not receive share allotments can also expect refunds within three days.
The market regulator’s board also approved proposals to introduce additional disclosures for foreign funds and certain tweaks to the real estate investment trust (Reit) rules, among other changes.
Sebi’s board also discussed the reduction of the total expense ratio (TER) of mutual funds but decided to drop the current proposal following representations from the industry. Instead, Sebi will introduce a fresh consultation paper on the issue.
In an interaction with reporters after the board meeting, Sebi chairperson Madhabi Puri Buch termed the move to reduce the listing timeline as a global first.
India is also among the first major markets to cut the timeline for settlements of shares from T+2 to T+1. T stands for the date the transaction happened.
“We are confident that the T+3 transition will happen without a glitch. All the market participants have ensured that such timelines will be met. With this, the issuers will get the money quicker, and the investors will get their shares quicker while the investors who did not get their allotment will get the refunds quicker too,” Buch said.
The market regulator also approved a proposal to enhance disclosure requirements for certain categories of foreign portfolio investors (FPIs). According to the proposal, any FPI holding more than 50% of its assets under management (AUM) in a single corporate group or having more than ₹25,000 crore of equity AUM in India will be required to submit detailed information about their end investors.
However, Sebi has also exempted certain categories of FPIs, including sovereign wealth funds and global pension funds, from the purview of the enhanced disclosures.
The move is aimed at preventing abuse of minimum public shareholding norms and Press Note 3 requirement, which mandates central government approval if the end investor belongs to a country that shares borders with India.
This proposal to enhance disclosures of FPIs comes at a time the markets regulator faced challenges in obtaining the end beneficiary information of foreign funds that were invested in Adani group companies. However, Buch reiterated that Sebi has adopted a risk-based approach and the action was not due to any recent cases.
“This proposal is a risk-based proposal, and it will impact a very small number of FPIs. We have given exemptions to the FPIs where we have not seen a big risk,” Buch added.
Based on feedback received from the industry, Sebi has also decided not to pass the proposal on tweaking the total expense ratio of mutual fund houses. Buch said the regulator would issue a fresh consultation paper that would be more acceptable to the industry.
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