C B Bhave has joined as the new SEBI chairman, and he is into action straightaway.
The latest update from the SEBI chairman is that the time gap between the closure of the IPO and the listing date of the IPO shares will be reduced to only 3 to 5 days.
Sources close to the developments said Sebi was also considering changing the price discovery, bidding and allotment process to eliminate grey market operations and having investor money locked up without interest payments for almost a month.
However, these changes will be introduced in phases.
In the first phase, applications will be allowed in both electronic and physical formats and the time gap between issue closure and listing kept to seven days. Once this 7 day process is found to be stable, the 3 days process will be gradually introduced.
The reason that SEBI is still willing to have the paper based applications is that “Many investors may not be familiar with the e-applications for the IPO, hence we need to keep an alternative for them”.
Also, the paperwork and information required will be set to minimum. Just quoting basic details like Name and PAN no. should be sufficient to apply for an IPO in the paper based application.
The decrease in the time gap between IPO issue closing date and listing date will solve one of Sebi's major concerns that promoters artificially boost demand in the grey market ahead of an IPO listing. Promoters typically take advantage of the time gap between closure and listing to put in bids in the grey market through.
Many brokers also take independent positions on stocks and charge clients a premium for doing so.
Shortening the time gap will also impact institutional investors who may have to pay the entire amount upfront along with their applications, like retail investors do now, against 10 per cent currently.
Related: Should you apply for an IPO
Interestingly, this reduction of time gap will be Highly beneficial for the individuals , who take a loan to apply for the IPO.
| They can now realize their actual stock worth in a matter of just 3 to 5 days and hence save a major cost for the interest rate they pay on the loan they borrow for the IPO. Not only them, even individual investors will save a lot as the interest they earn on their money in bank fixed deposits will be preserved. Hope to see some more good developments from SEBI. | Table of Contents |
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