January 5, 2018

Markets regulator Sebi today made electronic platform mandatory for all private placement issues on debt basis that have a threshold of Rs 200 crore.

Currently, the mechanism is mandatory for all private placements of debt securities with an issue size of Rs 500 crore or more.

The new norms are aimed at achieving better and transparent price discovery through the bidding process.

In a circular, Sebi said "all private placement of debt securities shall be required to be made through EBP (electronic book platform) if it is a single issue, inclusive of green shoe option, if any, of Rs 200 crore or more".

Besides, a shelf issue, consisting of multiple tranches, which cumulatively amounts to Rs 200 crore or above in a financial year would have to opt for the electronic platform.

Further, a subsequent issue, where aggregate of all previous issues by an issuer in a fiscal equals or exceeds Rs 200 crore would need to opt for the platform.

Also, the regulator has come out with a standard operational guidelines pertaining to Know Your Client (KYC) and bidding hours for electronic book providers like stock exchanges.

The new norms would come into force from April 1 this year.

According to Sebi, eligible participants bidding on proprietary basis, whose bid amount is at least Rs 15 crore or 5 per cent of the base issue size, whichever is lower, can bid directly.

In order to ensure operational uniformity across various EBP platforms, the bidding on the such platform will take place between 0900 hours to 1700 hrs, on the working days of the exchanges.

The regulator said that participants, prior to entering into the bidding process will be required to enroll with EBP. Such enrolment of a participant on an EBP will be one time exercise and will be valid till the time such enrolment is annulled or rescinded.

[The Economic Times]