SEBI modifies provisions pertaining to Electronic Book Provider platform

Editor_4

2 years ago

On 10-10-2022, the Securities and Exchange Board of India (‘SEBI’) has issued a circular on review of provisions pertaining to Electronic Book Provider (‘EBP’) platform and its usage for issue and listing of Non-convertible Securities, Securitized Debt Instruments, Security Receipts, Municipal Debt Securities and Commercial Paper to protect the interest of investors in securities and to promote the development of, and to regulate the securities market. The provisions of this circular will come into effect from 1-1-2023.

The modifications are discussed in detail below:

1. Private placement of debt securities and NCRPS:

S. No.	Issues of securities to be made from EBP platform	Revised (Circular dt 10-10-2022)	Earlier (Circular dt 10-08-2021)
1	Green shoe option	Rs. 50 crore or more	Rs. 100 crore or more
2	Shelf issue	Cumulatively amounts Rs. 50 crore or more	Cumulatively amounts to Rs. 100 crore or more
3	Subsequent issue	All previous issues equal or exceed Rs. 50 crore	Aggregate of all previous issues equal or exceed Rs. 100 crore

2. Issuers of debt securities and NCRPS:

S. No.	On private placement who may choose to access EBP	Revised (Circular dt 10-10-2022)	Earlier (Circular dt 10-08-2021)
1	Issue size less than	Less than Rs. 50 crore	Less than Rs. 100 crore

3. Obligations of issuers:

S. No.	Compliance	Revised (Circular dt 10-10-2022)	Earlier (Circular dt 10-08-2021)
1	The issuer shall ensure compliance with all requisite laws, rules, regulations, etc. with respect to private placement of securities including ensuring compliance with Section 42 of the Companies Act, 2013	the issuer, shall include the number of non-QIB eligible participants, on whose behalf arranger(s) is making bids in a particular issue, for the purposes of compliance.	an issuer, shall consider the number of eligible participants, on whose behalf arranger is making bid in a particular issue, for the purposes of compliance.
2	Placement Memorandum and the term sheet should disclose:	Details of size of the issue and green shoe portion, if any. Provided that the green shoe portion shall not exceed five times the base issue size. INSERTED: Interest rate parameter – Zero coupon, fixed coupon or floating coupon.	Details of size of the issue and green shoe option, if any, and a range within which such green shoe option, may be retained.

4. Participants:

S. No.	Bidding on EBP Platform	Revised (Circular dt 10-10-2022)	Earlier (Circular dt 10-08-2021)
1	Eligible participant(s)	cannot bid for an amount more than Rs.100 crore or 5% of the base issue size, whichever is lower, through arranger(s) on the EBP platform. INSERTED: Each eligible participant shall provide confirmation to the EBP that it is not using any software, algorithm, Bots or other automation tools, which would give unfair access for placing bids on the EBP platform.	bidding for an amount equal to or more than Rs.15 crore or 5% of the base issue size, whichever is lower, shall bid directly i.e. shall enter the bids directly on EBP platform.
2	An arranger	Can bid subject to the limits for each participant, I.e., Rs. 100 crores.	Should not bid on behalf of eligible participants for an amount equal to or more than Rs.15 crore or 5% of the base issue size, whichever is lower.
3	For bids made by an arranger for any particular issue, such arranger will have to disclose	INSERTED: a client bid i.e., entered on behalf of an eligible participant; a consolidated bid i.e., an aggregate bid consisting of proprietary bid and Client bids

5. Modification or cancellation of bids:

S. No.	Bidder can cancel or modify the bids made in an issue	Revised (Circular dt 10-10-2022)	Earlier (Circular dt 10-08-2021)
1	In the last 10 minutes of the bidding period, only revision allowed would be for:	downward revision of coupon/ spread or upward modification of price; and/ or upward revision in terms of the bid size	improvement of coupon/ yield and upward revision in terms of the bid size.
2	FORMAT Table 2: Details of cumulative demand received on EBP platform	1st Column– Coupon/ price/ spread 2nd Column- amount demand at that particular coupon/ price/ spread (in Rs. crore) 3rd Column- Cumulative amount demand (in Rs. crore)	1st Column- Yield (%) 2nd Column- Demand at that particular yield (in Rs. crore) 3rd Column- Cumulative Demand (in Rs. crore)
3	Allotment and settlement amount for the bidders should be based on	INSERTED Coupon specified by issuer: All bids shall be arranged as per ‘price time priority’. In case of ‘uniform yield allotment’, allotment and settlement value should be based on the cut-off price determined in the bidding process. In case of ‘multiple yield allotment’, allotment and settlement value should be based on the price quoted by each bidder/ allottee in the bidding process. Coupon discovered during bidding: All bids shall be arranged as per ‘yield time priority’. In case of ‘uniform yield allotment’, allotment and settlement value shall be based on the face value. In case of ‘multiple yield allotment’, allotment and settlement value shall be based on the price adjusted as per the coupon/ spread quoted by each bidder/ allottee in the bidding process.

6. OTHER INSERTIONS:

a. Anchor portion within the base issue size

b. Pay-in obligations

c. Withdrawal of offer by an issuer

d. Obligation of EBP to define the limits/ range, within which quotes may be placed, from its user interface, to avoid ‘fat finger’ errors.

*Kriti Kumar, Editorial Assistant has reported this brief.