A proposal to reduce the six-day listing period for shares in a public offering to three days was recently approved by the Securities and Exchange Board of India (SEBI). This move aims to expedite the process, allowing investors and issuers to receive their shares and funds more quickly. Alongside this decision, SEBI also plans to address concerns regarding the influence of financial influencers on retail investors. Additionally, the regulator has tightened disclosure norms for certain foreign portfolio investors (FPIs). Let's delve deeper into these developments and understand their implications.

SEBI Reduces IPO Listing Time

SEBI, the capital market regulator, has taken a significant step towards reducing the listing time for shares in public issues. The six-day timeline (T+6) will be shortened to just three days (T+3). This change will benefit various stakeholders by facilitating faster transactions and settlements. Investors will receive their shares and refunds promptly, while issuers can access their funds without delays. SEBI has expressed confidence in the smooth implementation of this revised timeline, with market participants conducting testing and stress testing to ensure compliance.

Implementation Phases and Deadlines

The revised timeline will be implemented in two phases. Initially, it will be voluntary for public issues opening on or after September 1, 2023. Subsequently, from December 1, 2023, it will become mandatory for all public issues. This staggered approach allows market participants to adjust their processes accordingly, ensuring a seamless transition to the new timeline. By streamlining the IPO listing process, SEBI aims to enhance the efficiency and convenience of capital market operations.

Protecting Retail Investors from Financial Influencers

SEBI acknowledges the growing influence of financial influencers, often referred to as finfluencers, on retail investors. The regulator plans to issue a consultation paper proposing norms that shield retail investors from inappropriate inducements and misleading information to address this concern. While SEBI appreciates the educational aspect of teaching about stock markets, it seeks to prevent inducements that promise unrealistic gains within a short period. This consultation paper, expected to be released within one or two months, will contribute to maintaining investor protection and market integrity.

Strengthening Disclosure Norms for FPIs

SEBI has also enhanced disclosure norms for certain foreign portfolio investors (FPIs). The new regulations mandate additional granular disclosures related to ownership, economic interest, and control for FPIs with significant holdings in a single corporate group or equity assets exceeding INR 25,000 crores. However, these additional disclosure requirements exclude sovereign funds, public retail funds, and exchange-traded funds (ETFs). Existing FPIs are granted three months to reduce their exposure to a single group to 50% or comply with the enhanced disclosure requirements. These measures aim to promote transparency and strengthen oversight in the FPI segment.

Conclusion

SEBI's decision to reduce the IPO listing time to three days and its commitment to protecting retail investors from inappropriate inducements demonstrates the regulator's focus on enhancing market efficiency and safeguarding investor interests. The expedited listing process will ensure faster transactions and settlements, benefiting investors and issuers. Additionally, the strengthened disclosure norms for FPIs aim to promote transparency and improve oversight in the capital market. As SEBI continues to adapt and evolve its regulations, it remains dedicated to maintaining investor confidence and fostering a robust and fair market ecosystem.