SEBI moves to halve listing time for debt securities

MUMBAI: SEBI has proposed to reduce the period for listing after the issue closure of debt securities substantially from the current T+12 to T+6 matching that of the equities.

There were earlier reports that the SEBI was thinking to further cut the listing time for equities from the present six days to three days.

It was in November, 2015,  that the time  taken  for  listing   of  equity  shares   and convertibles was  reduced  to  six  working  days. In fact, the move to make application supported by blocked amount (ASBA) compulsory for investors  helped cut time in listing of equity shares.

In order to achieve this in debt issues, SEBI proposes to make ASBA and subscription in demat mode mandatory. SEBI has sought public comment towards implementing this.

“An agenda item was taken to the Corporate Bond and Securitization Advisory Committee (CoBoSAC)  of  SEBI  wherein  the  committee recommended that  ASBA  may  be  made compulsory  for  public  issue of  debt  securities  along  with reduction  in  timelines  for allotment and commencement of trading from T+12 to T+6 and doing away with physical holding of debt securities,” SEBI stated in its website.

In  the  last  few  years,  the  corporate  bonds  market  has  emerged  as  one  of  the major sources  of  funding  for  the  corporates as  evidenced  by  increased  number  of issuances

Various   regulatory  initiatives   such  as   implementation   of  centralized database  for  corporate  bonds,  introduction  of  electronic  book  platform,  capping  of  number of ISINs etc. have been taken toward s the aim of developing the corporate bond  market.

“In this  direction,  it  is  felt  that  existing  issuance  processes  may  be  rationalized further to make it easier and friendly for both the issuers and investors,” said SEBI.

The market regulator noted that it felt  the  present  timeline  of  T+12  for  listing  and  commencement  of  trading in case of public issue of debt securities is inefficient in terms of cost and time and does not ensure smooth functioning for the public issuance process.

Also, it added, non-application of ASBA for  public  issuances and  physical  holding  of  debt  securities  lead to  unnecessary  hassles pertaining to refunds, increased cost to the issuers as well as investors.

It is expected that the mandatory ASBA facility would reduce the time taken for the processes involving the clearing of  payment  instruments,  forwarding  application  forms along   with   bank   schedules  to   registrar;   undertaking   of   technical   rejection   test, submission  of  status  of  clearance  of  payment  instrument, etc.,  to  around 4-5  days  as against the present seven days.

An  analysis  of public issuance  data  of  debt  securities revealed that during  calendar  year  2016  and  2017, out  of  total  number  of  investors,  around  88.69 per cent have  opted  to  subscribe  in  demat  mode  as  against only 11.31 per cent  who  have opted to receive debt securities in physical mode.

 

 

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