Capital markets regulator Sebi today said electronic book mechanism will become mandatory from tomorrow for issuance of debt securities worth over Rs 500 crore on private placement basis.
The move will help streamline procedures for issuance of debt securities on private placement basis, enhancing efficiency, transparency of the price discovery mechanism and improving liquidity in the secondary market.
It will be optional for the issues below Rs 500 crore, but the issuers will have to disclose coupon, yield, amount raised, number of investors and category of investors to the Electronic Book Provider or to the information repository for corporate debt market, in the format as specified by Sebi.
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All investors, including institutional as well as HNI's arrangers, are allowed to bid through this platform. Arrangers include merchant bankers, RBI registered primary dealers or any other registered intermediaries as notified by Sebi from time to time.
Such an electronic book may be created by entities to be named as Electronic Book Providers (EBPs) that would provide all bids/ application to the issuer after end of bidding.
In a statement, Sebi said: "Electronic book mechanism has been made mandatory from July 1 for issuance of debt securities on private placement basis in the primary market with an issue size of Rs 500 crore and above, inclusive of the green shoe option."
Recently, BSE and NSE have received Sebi's approval to act as EBPs to facilitate electronic book mechanism for issuance of debt securities on private placement basis.
"All the issuers of debt securities and market participants are hereby informed that they shall mandatorily make such private placement offer only through the EBM for their issuances with effect from July 1, 2016," Sebi said.
EBPs are required to have all the necessary infrastructure like adequate office space, equipment, risk management capabilities, manpower and other information technology infrastructure to effectively discharge its activities.
