MUMBAI: The capital market regulator Securities and Exchange Board of India (SEBI) is likely to come out with a detailed guidelines on e-IPO in another one month. Sources said that the matter was discussed in the primary market advisory committee (PMAC) of Sebi last week and the regulator is in the process of finalising the detailed norms. E-IPO allows investors to electronically apply for shares in an IPO through the stock brokers electronic trading terminals across the country.
A person familiar with the discussion said that an investor wishing to apply through the electronic mode would have to give a one-time mandate to the stock broker for availing this facility. Since all the know your customer (KYC) details are already updated in the brokers system, an investor is just required to enter the minimum details while participating in an initial public offer. “This can be done either by investors themselves by downloading the application form and submit it online using the stock brokers online platform or they could give instructions to the stock broker, who will punch the order, which is similar to any other secondary market transactions,” said the person cited above.
The introduction of e-IPO would help eliminate the printing of thousands of application form and help reduce the overall cost of public issuance. Apart from that, experts pointed out that the proposed mechanism would also help in reducing the time taken between the closure of an IPO and its listing from the current 12 days to six days.
In a discussion paper released on e-IPO in January this year, the capital markets regulator pointed out that once the bid has been entered in the bidding platform by a stock broker, clearing corporation could block 100 per cent funds from the cash collateral of the stock broker.
National Payment Corp-oration of India (NPCI) has implemented National Automated Clearing House (NACH), a web based solution to facilitate interbank, high volume electronic transactions, which are repetitive and periodic in nature.
