SEBI proposes changes to Electronic Book Provider platform to ensure that allocations are based on the best bid as opposed to those placed with the best technology

Securities and Exchange Board of Indian (SEBI) proposes to revise provisions pertaining to the Electronic Book Provider (EBP) platform for issuances to be made through EBP, the eligible participants, obligations/ responsibilities of various entities, provision to issuer to withdraw offer, process of bidding and allotment, etc.

SEBI had received presentations from various market participants, requesting for review of the provisions pertaining to EBP platform to address the issues of ‘fastest finger first’ (viz. allotment based on time priority in bidding for issuances with fixed parameters) and ensure that allocations based on the ‘best bid’ are enabled rather than the bidder with the best technology for placing the fastest bid.

These changes will come into effect from January 1, 2023.

Key Highlights of the proposed changes –

1. The concept of ‘anchor investor’ as an option for issuers to assess the demand and receive assurance from certain perspective investors towards subscription has been introduced.
2. It has been clarified that a withdrawal from the issue process implies withdrawal of the total issue including anchor portion.
3. Now eligible participant must  provide confirmation to the EBP that they are not using any tools which give them unfair access for placing bids on the EBP platform.
4. Preferential access must not be provided to any bidder on a selective basis.
5. The cap on the bid amount for each participant has been increased from Rs. 15 crore to Rs. 100 crore

Source : Securities and Exchange Board of Indian