Cutting listing time needs systemic changes

Even as the Securities and Exchange Board of India (Sebi) mulls reducing the time between the close of initial public offerings (IPOs) and the listing, market intermediaries feel that unless backed by a robust technology platform, the process may not be feasible. Currently, it takes about three weeks to list shares after the closure of subscription.

Around 700,000 to 800,000 application forms come from retail investors in the metropolitan cities and the interiors of the country.

A significant portion of them apply through the offline process (application forms are submitted, they are uploaded on the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE) stations, cheques cleared by the banks and a receipt of acknowledgment is sent to the investor) which is time-consuming.

Investment bankers say the Sebi proposal would be feasible now only if the retail portion is kept out of the process. About 2 to 3 lakh applications come from high net worth individuals (HNIs) and a maximum 200 applications come from qualified institutional bidders (QIBs).

"Logistics wise, it will be difficult since the response from retail investors in the interiors of the country has been tremendous in the recently concluded issues," said a banker .

Unless the technology is robust, this cannot be managed," said an investment banker, who requested anonymity.

Following his first board meeting on Wednesday since taking charge, Sebi Chairman CB Bhave announced a proposal to reduce the time between the close of IPOs and the listing. to lessen the scope of price manipulation and reduce the period for which investors' money was locked.

Some market intermediaries, however, suggested that while Sebi's proposal sought to curb grey market operations, major deals in the grey market happened before an issue opened for subscription.

They said that selling the IPO on-screen through stock exchanges was one way of ensuring that the process was completed in transaction plus two days (T+2). It was also necessary to gear up the banking system to process cheques in a shorter period.

A decision on this issue will be taken after seeking public reaction and the Primary Market Advisory Committee discusses this with the Sebi board.