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The Electronic Book Provider (EBP) is a SEBI-registered recognised stock exchange that provides an electronic platform for the private placement of securities. In other words, the EBP provides a way of issuing debt securities on a private placement basis. The platform will bring price discovery transparency and eliminate time and extra costs. Based on the representations received from the various market participants, the SEBI has reviewed the guidelines through a circular “Review of provisions pertaining to Electronic Book Provider platform” dated 10th October 2022. The said circular is issued to provide a fair opportunity to the bidder. It becomes essential that the allocation shall be based on the best bidder rather than on the bidder who possesses the best technology for placing the fastest bid. Further, the circular brings other modifications discussed in this article.
Table of Contents
The bidders who are eligible on EBP platforms are:
The issuer shall have an obligation to perform the duty as mentioned below:
The provision states that the participants must enrol with the Electronic Book Provider. It is a one-time process and shall be valid till the time it is annulled or rescinded. Along with the enrolment, the KYC verification of participants shall be done in the following manner:
Further, the EBP shall perform the below-mentioned functions:
Moreover, the present circular has modified the responsibilities of the participants and states that the participantsare responsible for the below-mentioned functions:
Along with the modifications in the responsibility of participants, the present circular has also inserted new responsibilities for arrangers, who are as follows:
The bidding timing and period shall be:
The bidding announcement shall be made in the following ways:
The revision circular has inserted the bidding process and states that it shall be based on the following:
The bids can be modified or cancelled provided:
The present circular has inserted the new provision for allotment and settlementamount for the bidder and states that it shall be based on the following:
The present circular has also modified the manner of disclosure of bids, namely:
1st Column: Coupon or Price or Spread
2nd Column: Amount demand at that particular coupon/ price/spread (in crore)
3rd Column: Cumulative amount demand (in crore)
The present circular has inserted a new provision for determining the anchor portion for the specified anchor investors. The modifications allow the issuer toopt for the offer of “Anchor Portion”within the base issue size provided:
Further, the remaining issue portion shall be open for other participants on the Electronic Book Provider platform. Moreover, the anchor investor can also participate in the remaining portion, provided it has been identified as a participant by the issuer.
The revision has included one more obligation in the list of EBP. It states that the Electronic Book Provider shall place a facility to determine the eligible participants who are allowed to quote within the defined limits or range. This step is introduced to avoid “Fat Finger “errors.
The SEBI is a body responsible for protecting investors from unfair practices. The representation received from the issuers, arrangers, banks, mutual funds has necessitated the need for revising the provisions of the Electronic Book Provider platform. The current modifications are issued to remove any difficulties for the bidders who bid through conventional techniques. The aim is to provide a better framework so that the participant who makes the best bid shall be given the opportunity of purchasing the securities. Moreover, the arranger is also refrained from using any software or algorithm that may influence the bidding process.
Read our Article: Depository Participants- Definition & Services to Stock Investors?
An Advocate by profession, Nikhil Mogha holds experience in the field of Business and Securities law. He has done his Masters of Law in Corporate Law from Guru Gobind Singh Indraprastha University, New Delhi. He is also versed with the drafting and research work in the field of Company Law, Banking Laws and Contract Laws.
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