The Securities Exchange and Board of India (SEBI) on October 10, 2022, issued a circular to revise chapter VI of the Operational Circular no. SEBI/HO/DDHS/P/CIR/2021/613 dated August 10, 2021, issued by SEBI, prescribes provisions pertaining to Electronic Book Provider (EBP) platform. The circular specifies the issuances which must necessarily be made through EBP, the eligible participants, obligations/ responsibilities of various entities, the provision to an issuer to withdraw offers, the process of bidding and allotment, etc.
Many market participants have submitted requests to SEBI asking for a review of the provisions pertaining to the EBP platform to address issues such as "fastest finger first" (i.e., allocation based on time priority in bidding for issuances with fixed parameters), certain bidders not receiving allocations despite working on the issuance pre-listing, a high ratio of green shoe to base issue size, restrictions on arrangers placing bids on behalf of clients, etc.
The aforementioned topics were discussed with market participants such as issuers, arrangers, investors (e.g., banks, mutual funds), stock exchanges, depositories, and at meetings of the Corporate Bonds and Securitization Advisory Committee (CoBoSAC). It was discovered that in order to solve the worry of 'fastest finger first,' the book building process must be modified to ensure allocations are based on the 'best bid' rather than the bidder with the finest technology for putting the fastest bid. Furthermore, many issuers have highlighted the need for the concept of "anchor investor" to be introduced as an option in order for them to analyse the demand and gain assurance from particular prospective investors regarding subscriptions.
After consultation, the other stipulations of the existing EBP framework like threshold limits for applicability, Bidding limits for arrangers, Penalty in case of default etc. have also been modified.
Annexure – A which specifies Chapter VI (Electronic Book Provider platform) have been revised.
The provisions of this circular will come into effect from January 01, 2023.
[Circular No. SEBI/HO/DDHS/ DDHS_Div1/P/CIR/2022/00139]
