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Sebi proposes changes in ITP norms to attract more firms

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The Securities and Exchange Board of India ( Sebi) on Friday proposed changes to the Institutional Trading Platform (ITP), to draw more companies to it. Comment on the discussion paper has been invited till August 14.
Introduced in 2013, the platform allows companies, particularly in information technology ( IT), to list without necessarily doing an Initial Public Offer of equity. So far, only around 40 companies are listed on the ITP platforms of the BSE or the National Stock Exchange.
IT companies to qualify on this platform need Qualified Institutional Buyer ( QIB) shareholding of at least 25 per cent; other companies need 50 per cent. Sebi has proposed to expanded the definition of QIBs to investors such as family trusts and individual foreign investors. Also, to do away with the 25 per cent cap on single investors listed on the platform.
Further, it proposes to reduce the minimum institutional investor participation, from 75 per cent to 50 per cent. Also, to increase the ceiling on allotment to individual institutional investors from 10 per cent to 25 per cent to a single entity. Sebi has also proposed to make market making compulsory for a minimum of three years for an issue size of less than Rs. 100 crore.

KEY SEBI PROPOSALS

  • Definition of QIBs expanded to include family trusts and individual foreign investor
  • Minimum investment required for institutional investor cut to 50% in IPOs 
  • Trading lots halved from Rs.10 lakh to Rs. 5 lakh 
  • Currently, 40 companies are listed on the ITP platforms of the BSE and NSE

Business  Standard New Delhi,30th July 2016

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