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.