From December 1 onwards, all Indian firms will be required to have a T+3 listing on the bourses, where 'T' refers to the issue's closing date. It means that the listing candidates must make their debut at Dalal Street within three working days after the issue's close.
In June of this year, the Securities and Exchange Board of India (Sebi) cut the IPO listing timetable in half, from six days to three days. The new rule was adopted in two stages, with the first being optional beginning September 1, 2023 and becoming required beginning December 1, 2023.
Explaining the reasoning, the capital market watchdog stated that the change is likely to benefit issuers who will receive securities listed in a shorter period of time, as well as those who have not been assigned securities, as they would receive their money back sooner.
According to Mahavir Lunawat, Managing Director at Pantomath Capital Advisors, when many issues run concurrently, IPOs become delayed and investors are unable to participate. "Reduced timeframe will enable investors to plan better, especially at a time when the Indian market is gearing up for significant capitalization," said Mr. Singh.
It is more operationally efficient, and a faster turnaround time means investors have higher liquidity because money are blocked for a shorter period of time, according to Narendra Solanki, Head - Fundamental Research, Anand Rathi Shares & Stock Brokers. "As a result, there are more options for deploying funds in other ways." "The overall impact on markets, if any, could only be positive," he said.
The new procedure will unblock bidders' finances in half the time. Retail investors with less cash to invest typically have their assets blocked for a longer amount of time, missing out on opportunities to invest elsewhere. If they are not among the allottees, this will lower their opportunity cost.
The new rule, on the other hand, will help non-institutional investors, commonly known as NIIs or HNIs. They typically borrow funds for investments at a higher rate of interest, lowering their funding costs significantly.
Manish Chowdhury, Head of Research at StoxBox, believes that SEBI's decision to shorten the listing period from six to three days from the day of issue closure is a step in the right direction. The ruling will benefit both issuers and investors.
"In addition, investors in the issue would benefit from a prompt refund of the applied amount." "We believe the decision is intended to benefit all stakeholders involved in the IPO process by allowing them to make the best use of their available resource pool," he said.
It is a fantastic move by the Indian capital market regulator (SEBI) because it will provide companies with faster access to capital raised, improving the ease of doing business, and it will provide investors with early credit and increased liquidity, allowing them to participate in secondary markets or apply for multiple issues, according to Prashanth Tapse, Senior VP (Research), Mehta Equities.
Ratnaveer Precision Engineering was the first firm to be listed on T+3. The company went public on September 11, 2023, after selling its IPO for Rs 93-98 a share between September 4-6. Flair Writing Industries, which went public on December 1, 2023, was the last firm to opt for a T+3 listing and make its T+4 debut. Plaza Wires was the last manufacturer to introduce T+6.
According to Sebi, the decision was made after consulting with all stakeholders, including anchor investors, registrars, transfer agents, broker-distributors, and banks, as well as conducting a stress test. It had been assured to be smooth, as Madhabi Puri Bach, the chairperson of Sebi, indicated when the new guidelines were published.
