December 1, 2023: T+3 IPO Listing Becomes Mandatory

The T+3 IPO listing for all the Indian companies will be mandatory from December 1, 2023 onwards. The ‘T’ stands for the closure date of the issue.

This means the IPO must be listed on the third day after closing day. For instance, let’s say the IPO is closing on the 3rd of a month (T), and the shares will be listed on stock exchanges on the 6th of the month (T+3). Previously, it was T+6.

Markets regulator the Securities and Exchange Board of India (SEBI) had halved the IPO listing timeline to three days from six days earlier, in June 2023. The new rule was implemented in two phases, where it was optional from September 1, 2023, and made compulsory from December 1, 2023.

With this move, issuers will likely benefit as they would receive securities listed in a shorter timeframe, along with those who have not been allotted securities, as they will get their money back faster.

Experts are of the opinion that a reduced timeline will enable investors to plan better. Moreover, a shorter turnaround time would result in investors having better liquidity as funds would remain blocked for less duration. As a result, it opens up more options to deploy funds in other avenues.

The new move will lead to unblocking of the funds of bidders in half the time. Retail investors, who have limited capital to invest, generally have their funds blocked for a longer duration and, at times, tend to miss the opportunity to invest elsewhere. This will reduce their opportunity cost in case they are not among the allottees.

Furthermore, Non-Institutional Investors (NIIs) or High-Networth Individuals (HNIs) will also be benefitted from the new guideline. Such individuals usually borrow funds for investments at a higher interest rate; therefore, their funds cost will be reduced considerably.