Sebi plans instant settlements of stock market transactions

MUMBAI:  In a move that will further cut transaction time in the stock market, the Securities and Exchange Board of India (Sebi) is working on the mechanism for instant transaction settlement in the stock exchanges, Chairperson Madhabi Puri Buch said on Monday.

The market regulator is also considering allowing the delisting of companies via fixed price instead of the reverse book-building procedure, she added. Several technology-driven regulatory measures taken by it in the past have resulted in monetary benefits of Rs 3,500 annually.

“Certainly, one of the things that we think is not very far off is even instantaneous settlements on the stock exchange,” Buch said in a press conference. “We are working on that, we are engaged with the ecosystem and we believe that in not very far future we will have a mechanism which will facilitate instantaneous settlement of transactions on the stock exchanges. That’s where we are headed,” she added.

Sebi is also considering permitting a promoter to place a delisting offer at a fixed price for shareholders. A discussion paper on delisting of companies via fixed price is likely to be issued by December. In the reverse book-building process to delist a company from stock exchanges, shareholders place offers for the price at which they are willing to sell securities back to the promoters, or large shareholders who can influence company policy.

A delisting price is then computed based on these offers. “In Sebi, we don’t like ‘Abhimanyus’, nobody should feel once they get in, they can’t get out. Therefore, we introduced a framework for voluntary delist,” said Sebi chief, while commenting on the framework for voluntary delisting.