A shortened timeline of T+3, replacing the existing T+6, will be introduced on a voluntary basis for public issues commencing on or after September 1. This will become obligatory for all issues beginning on or after December 1, 2023.
In a span of less than a month, investors could experience the expedited listing of companies following the conclusion of their initial public offering (IPO).
The Securities and Exchange Board of India (Sebi) has declared that effective September 1, companies will have the option to have their shares listed within three days after the closure of the IPO bidding period. Presently, companies are granted a span of six days to list their shares subsequent to the closure of the public issue for subscription.
"In light of extensive discussions with market participants and taking into account the feedback received from the public in response to the consultation paper, the decision has been made to shorten the duration for the listing of designated securities to 3 working days (T+3 days) after the conclusion of a public issue. This is a change from the current requirement of 6 working days (T+6 days), with 'T' representing the issue closing date," as stated in a circular issued by Sebi on Wednesday.
While the condensed timeline will be introduced as an optional measure for public issues commencing on or after September 1, it will be obligatory for all issues that commence on or after December 1, 2023.
This holds significance from both a corporate and an investor perspective. A condensed timeline implies that investor funds would be tied up for a shorter duration, and for companies, a truncated timeline would translate to reduced exposure to market volatility and fluctuations.
Interestingly, Sebi's recent action is a component of the regulator's comprehensive efforts to abbreviate the settlement timeline across different segments of the market.
Currently, the secondary markets operate on a T+1 settlement cycle, and mutual funds have transitioned to a T+2 cycle. Furthermore, Sebi's Chairperson, Madhabi Puri Buch, has clarified that the regulator, in conjunction with various market participants, is already engaged in discussions about implementing an instant settlement mechanism for the Indian stock markets.
