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To ease the process of issuance of securities on electronic book platform, markets regulator SEBI today allowed investors to place multiple bids in a private placement issue on debt basis and permitted depositories to act as facilitators.
In addition to the current system of open bidding, Sebi has allowed closed bidding on electronic book platform (EBP). This is subject to the issuer disclosing the mode of bidding.
Under closed bidding, there will be be no real-time dissemination of bids on the EBP platform.
The decision has been taken in consultation with market participants, the Securities and Exchange Board of India (Sebi) said in a circular.
The move is aimed at further rationalising and easing the process of issuance of securities on such platform.
SEBI, in January this year, had made electronic platform mandatory for all private placement issues on debt basis that have a threshold of Rs 200 crore. Earlier the threshold was Rs 500 crore.
According to the regulator, an issuer can choose either uniform yield or multiple yield allotment.
Besides, investors are now permitted to place multiple bids in an issue. In addition to the stock exchanges, Sebi said that depositories can also act as electronic book provider.
The electronic book provider is 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.
It will have to ensure that there is adequate backup, disaster management and recovery plans for the electronic book mechanism provided by EBP.
In addition to the current process of pay-in of funds through clearing corporation, the pay-in of funds towards an issue on EBP will also be permitted through escrow bank account of an issuer.
“The process of pay-in of funds by investors and pay-out to issuer can be done on either T+1 or T+2 day, where T day is the issue day,” Sebi said.
Sebi said that allotment to the bidders will be done on the basis of “yield-time priority“.
Thus, allotment will be done first on “yield priority” basis. However, where two or more bids are at the same yield, then it will be on “time - priority” basis. Further, if two or more bids have the same yield and time, then it will be done on “pro-rata” basis.
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