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TMI BlogReview of provisions pertaining to Electronic Book Provider platformX X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 50 crore or more; 2.1.2. a shelf issue, consisting of multiple tranches, which cumulatively amounts to Rs. 50 crore or more, in a financial year; and 2.1.3. a subsequent issue, where aggregate of all previous issues by an issuer in a financial year equals or exceeds Rs. 50 crore. 2.2. Issues of debt securities and NCRPS on private placement basis, irrespective of issue size, by issuers who are in existence for less than three years, in accordance with Clause 2.3.8 c. of Schedule II to the SEBI NCS Regulations, 2021. 2.3. The issuance of PDIs, PNCPS, PCPS, RNCPS, and instruments of similar nature which are essentially non-equity regulatory instruments, forming part of a bank's or NBFC's capital, issued as per RBI stipulations and listed under Chapter V of the SEBI NCS Regulations, 2021, irrespective of the issue size. 3. An issuer, if desirous, may choose to access EBP platform for private placement of municipal debt securities or CPs or CDs also. 4. Issuers of debt securities and NCRPS on private placement basis of issue size less than Rs. 50 crore may also choose to access the EBP platform for such issuances. 5. The obligations of issuers are as under: 5.1. The issuer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed. 6.2. The KYC verification and enrolment of the eligible participants on the EBP platform shall be done in the following manner: 6.2.1. KYC verification shall be undertaken by obtaining/ utilizing existing KYCs of clients from KYC Registration Agencies (KRAs) registered with SEBI or on the basis of the guidelines as prescribed by SEBI from time to time. 6.2.2. For QIB investors bidding directly or through arranger(s), KYCs and enrolment shall be done by the EBP. 6.2.3. For non-QIB investors bidding directly, KYCs shall be done by the issuer and enrolment shall be done by the EBP. 6.2.4. For non-QIB investors, which are bidding through arranger(s), KYC and enrolment on EBP shall be ensured by arranger(s). 6.3. EBPs shall ensure that all eligible participants have access to the Placement Memorandum (PM), term sheet and other issue specific information available with them. 6.4. 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. 6.5. Each EBP shall ensure that it does not provide any preferential access to any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... P, at least a day before the bidding date. Provided that such changes in bidding date or time shall be allowed for a maximum of two times. 7.3. The bidding process on EBP platform shall be on an anonymous order driven system. 7.4. Bid shall be made by way of entering bid in: 7.4.1. Price; or 7.4.2. Coupon (in %), up to four decimal places; or 7.4.3. Spread in basis points (bps). Further, the bid amount shall be specified in Rupees (INR). 7.5. Bidding process shall be based on the following: 7.5.1. Coupon specified by issuer: The face value and coupon remaining constant, bids/ quotes shall be placed by the bidders in terms of price. 7.5.2. Coupon/ spread discovered during bidding: The face value remaining constant, bids/ quotes shall be placed by the bidders in terms of coupon/ spread. 7.6. Investors may place multiple bids in an issue. 7.7. Modification or cancellation of the bids shall be allowed i.e. bidder can cancel or modify the bids made in an issue, subject to the following: 7.7.1. such cancellation/ modification in the bids can be made only during the bidding period; 7.7.2. no cancellation of bids shall be permitted in the last 10 minutes of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... total allocation to the anchor(s) not exceeding 30% of the base issue size. 8.1.3. There shall be no bidding for anchor portion on the EBP platform. 8.1.4. If the issuer opts for anchor portion, the same shall be suitably disclosed in the placement memorandum and the term sheet, along with the relevant quantum (maximum 30%). 8.1.5. Issuer shall disclose details of the anchor investor(s) and the corresponding quantum allocated, to the EBP, along with the Placement Memorandum and the term sheet. 8.1.6. The settlement amount for the anchor investor(s) shall be determined on the basis of the following: a. Coupon specified by the issuer: Uniform yield allotment: The 'cut-off' price determined in the bidding process (in case of issues with anchor portion, it will imply total issue size less the anchor portion). Multiple yield allotment: Face value of the security. Provided that, in case of re-issuance, the 'cut-off' price determined in the bidding process shall be applicable on the anchor investor(s). b. Coupon/ spread determined in the bidding process: Uniform yield or multiple yield allotment: Face value of the security 8.2. The remaining portion of the issue (i.e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the issuer in the PM/ IM. The funds pay-in by the successful bidders will be made only from the bank account(s), which have been provided/ updated in the EBP system. Further, pay-in received from any other bank account will lead to cancellation of bid and consequent debarment of the investor from accessing EBP platform for 30 days. 9.6.2. Escrow bank, pursuant to receipt of funds will provide a confirmation to the RTA, associated with the issue, about receipt of funds along with details including name of bank account holder, bank account number and the quantum of funds received. 9.6.3. RTA, will then reconcile the information received from escrow bank with the details as provided by EBP and after reconciliation RTA shall intimate to the issuer about receipt of funds. Subsequently, issuer will initiate the process of corporate action through the RTA to Depository. 9.6.4. RTA, after passing on the instructions for corporate action to the depositories, will issue instruction to the escrow bank to release money to the issuers bank account. 10. Withdrawal of offer by an issuer: 10.1. An issuer, at its discretion, may withdraw from the issue process at any time; however, subse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the EBP, upon closure of the issue, the status of the issue i.e. successful or withdrawn, details of defaulting investors etc. 12. Obligations and duties of EBP: 12.1. An EBP shall: 12.1.1. provide an on-line platform for placing bids; 12.1.2. have necessary infrastructure like adequate office space, equipment, risk management capabilities, manpower and other information technology infrastructure to effectively discharge the activities of an EBP; 12.1.3. ensure that the PM, term sheet and other issue related information is available to the eligible participants on its platform immediately on receipt of the same from the issuer; 12.1.4. have adequate backup, disaster management and recovery systems; and 12.1.5. ensure safety, secrecy, integrity and retrievability of data. 12.2. EBPs shall ensure that all details regarding the issuance is updated on its website. 12.3. EBPs shall together ensure that the operational procedure is standardized across all EBP platforms and the details of such operational procedure are disclosed on their websites. 12.4. Where an issuer has disclosed estimated cut-off yield to the EBP, the EBP shall ensure its electronic audit trail an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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