Review of provisions pertaining to Electronic Book Provider platform

Review of provisions pertaining to Electronic Book Provider platform (Revision in Chapter VI of the Operational Circular for issue and listing of Non-convertible Securities, Securitised Debt Instruments, Security Receipts, Municipal Debt Securities and Commercial Paper)

1. 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 said circular stipulates the issuances which have to necessarily be made through EBP, the eligible participants, obligations/ responsibilities of various entities, provision to issuer to withdraw offer, process of bidding and allotment, etc.
   
2. SEBI has received representations from various market participants, requesting for review of the provisions pertaining to EBP platform, in order to address the issues of ‘fastest finger first’ (viz. allotment based on time priority in bidding for issuances with fixed parameters), certain bidders not getting allocations despite having worked on the issuance pre-listing, high ratio of green shoe to base issue size, limits on arrangers placing bids on behalf of clients, etc.
   
3. The said issues were discussed with market participants including issuers, arrangers, investors (e.g. banks, mutual funds), stock exchanges, depositories, and also at the Corporate Bonds and Securitization Advisory Committee (CoBoSAC) meetings. It was observed that in order to address the concern of ‘fastest finger first’, it is essential to modify the book building process to ensure allocations based on the ‘best bid’ rather than the bidder with the best technology for placing the fastest bid. Further, certain issuers have expressed the need for introduction of the concept of ‘anchor investor’ as an option, in order to enable them to assess the demand and receive assurance from certain prospective investors towards subscription.
   
4. 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 after consultation.
   
5. Accordingly, it is proposed to replace the extant Chapter VI (Electronic Book Provider platform) of the aforementioned Operational Circular with a revised Chapter, as enclosed herewith, Annex –A.
   
6. The provisions of this circular shall come into effect from January 1, 2023.
   
7. The Circular is issued in exercise of the powers conferred under Section 11(1) of the Securities and Exchange Board of India Act, 1992 read with Regulation 55 of the SEBI (Issue and Listing of Non-convertible Securities) Regulations, 2021 and Regulation 29 of SEBI (Issue and Listing of Municipal Debt Securities) Regulations, 2015, to protect the interest of investors in securities and to promote the development of, and to regulate the securities market.

Annexure

Read More on SEBI