Market players see initial hiccups in implementing T+3

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The Securities Exchange Board of India in a board meet on Wednesday, reduced the time period for listing of shares for IPO to 3 days instead of existing 6 days from the date of issue closure.

The revised timeline of T+3 days will be applicable in two phases – voluntary for all public issues opening on or after September 1, 2023 and mandatory on or after December 1, 2023.

“The shorter timeframe will bring tangible benefits to all stakeholders involved, facilitating faster access to funds for issuers, expedited allotment of securities for investors, and quicker refunds for non-allottees”, said Aayush Agrawal, AVP, Merchant Banking, Swastika Investmart.

The reduction in timeline is related to Sebi’s introduction of United Payment Interface (UPI), in November 2018, as an additional payment mechanism with Application Supported by Blocked Amount (ASBA) for retail investors. With this, Sebi prescribed the timelines for listing within six days of closure of issue (T+6). In order to further simplify the process, the timeline has been reduced to T+3 days.

According to Bhavik Thakkar, CEO of Abans Investment Managers, the use of technology and ASBA makes it possible to reduce this time from around 15 days a decade ago to 3 days now. While equity is not a short-term investment but lot of people invest in IPO for listing gains. From their perspective, this frees up capital faster and gives them opportunity to apply or invest somewhere else, he added.

In the existing six-day process, the registrar finalises the basis of allotment in T+3 which will now be revised to T+1, on or before 6 pm. The move is in line with the recommendations made by the capital market regulator in its May discussion paper.

The change comes after SEBI’s extensive consultation with all stakeholders including anchor investors, registrar & transfer agents, brokers, distributors, banks, etc. Extensive stress testing has been done to confirm that the transition to T+3 would be smooth.

However, market experts predict that the procedure may see initial hiccups because the parties involved will require adequate infrastructure to meet the new timelines.

 “It is not going to be an easy task for merchant bankers and a lot of teething problems are expected initially”, said Kulbhushan Parashar, founder and Managing Director, Corporate Capital Venture.

According to Puneet Passi, Partner, IndusLaw, this expedited listing process warrants careful consideration of operational concerns, such as ensuring robust infrastructure, efficient settlement systems, and seamless coordination among market participants. Striking a balance between expeditious listing and maintaining operational integrity will be crucial in harnessing the full potential of this regulatory change.


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