The IPO Listing Timeline Is Reduced To T+3 by SEBI; Details

The Securities and Exchange Board of India (Sebi) board accepted a proposal on Wednesday to reduce the time it takes for shares to list on exchanges after initial public offers (IPOs) from six to three days.

The SEBI claims that by taking this action, both issuers who have been assigned securities and those that have not would benefit from receiving their money returned more quickly. It is anticipated that this action would also limit kerb trading.

“The revised timeline of T+3 days shall be made applicable in two phases, i.e., voluntary for all public issues opening on or after September 01, 2023, and mandatory on or after December 01, 2023,” the market regulator said after its board meeting in Mumbai.

The registrar completes the basis of allocation in the current six-day procedure in T+3, which is now amended to T+1, on or before 6 p.m.

According to SEBI, this action would guarantee that resources from stakeholders like banks, stock exchanges, and brokers are used for a shorter amount of time.

Following the board meeting, SEBI Chair Madhabi Puri Bach discussed this action at a news conference. “This move ensures that the entire process is quicker, as issuers get their money, those who don’t get allocated get their money back, and at the end of the day, time is money,” the speaker stated. Thus, this action saves both time and money.

Buch said that the move to shorten the listing period to three days is a “global first” and that “all market participants have tested its applicability,” therefore he is certain it will go well.

The choice was made after thorough simulations and back-testing by all parties involved, including stock exchanges, sponsor banks, NPCI, depositories, and registrars, with regard to different steps in the public offering process.

The issuer has previously submitted a listing application to stock exchanges asking for authorization to trade on T+5. Now, on or before 6:30PM on T+2, this will be completed.

In 2018, Sebi mandated a listing schedule of six days after the close of the offer and established the Unified Payment Interface (UPI) as an alternative payment method with Application Supported by Blocked Amount (ASBA) for retail investors.

The listing timeframe, which had previously been as long as 22 days, was then cut down to 12 days.