The mandatory implementation of the T+3 IPO listing timeline for all Indian companies from December 1, 2023, marks a significant shift in the securities market landscape. Under this regulation, the ‘T’ day represents the closure date of the IPO issue, and the shares must be listed on stock exchanges by the third day after the closing day, denoted as T+3. This is a reduction from the previous T+6 timeline.
The Securities and Exchange Board of India (SEBI), the markets regulator, initiated this change in June 2023, halving the IPO listing timeline from six days to three days. The transition to the new rule occurred in two phases, with it being optional from September 1, 2023, and mandatory from December 1, 2023.
This adjustment in the IPO listing timeline is expected to bring several benefits to various stakeholders in the securities market. Issuers stand to gain as they will receive securities listed in a shorter timeframe, enhancing the efficiency of the capital-raising process. Additionally, investors who have not been allotted securities will receive their money back faster, improving liquidity.
Experts view the reduced timeline positively, emphasizing its potential to enable investors to plan their investments more effectively. A shorter turnaround time means that investors’ funds will be blocked for a shorter duration, allowing for greater flexibility in deploying capital across different investment avenues.
One notable advantage of the T+3 IPO listing timeline is the quicker unblocking of funds for bidders. Retail investors, in particular, who may have limited capital to invest, often have their funds tied up for extended periods, potentially causing them to miss out on other investment opportunities. With funds becoming available sooner, retail investors can mitigate their opportunity costs, even if they are not allotted shares in the IPO.
Moreover, Non-Institutional Investors (NIIs) or High-Net-Worth Individuals (HNIs) are expected to benefit from the new guideline. These investors commonly leverage funds for investments, incurring higher borrowing costs. The shorter IPO listing timeline will reduce the duration for which their funds are tied up, consequently lowering their overall funding costs.
In summary, the shift to a T+3 IPO listing timeline represents a significant regulatory change aimed at enhancing efficiency and liquidity in the Indian securities market. By streamlining the IPO listing process, the new timeline is poised to benefit issuers, investors, and other market participants alike, fostering a more dynamic and accessible investment environment.
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