Electronic book mechanism for issuance of debt securities on private placement basis
Summary
This circular mandates an electronic book mechanism for private placements of debt securities with an issue size of Rs. 500 crores and above. It defines the roles of Electronic Book Providers, arrangers, sub-arrangers, and investors within this framework. The document outlines eligibility criteria, operational procedures, and compliance requirements effective from July 1, 2016.
Text
this electronic book mechanism would be mandatory for all private placements of debt securities in primary market with an issue size of Rs.500 crores and above, inclusive of green shoe option, if any.
The following issuers shall have an option to follow either electronic book mechanism or the existing mechanism: issues with a single investor and where coupon rate are fixed... issues wherein the issue size is less than Rs. 500 crores
The electronic book mechanism shall be provided by recognized stock exchange(s) only after obtaining prior approval from SEBI.
The following shall be eligibility conditions for a recognised stock exchange to act as EBP: provide on-line platform, own website/URL, have necessary infrastructure, ensure backup/disaster management, ensure safety/secrecy/integrity/retrievability of data, and subject to periodic audit by CISA.
Arranger shall be categorised as a Category 1 Participant who may enter bids on EBP either on proprietary basis or for other participants such as High Net worth Individuals (HNIs), Institutional investors etc.
Institutional investors shall be categorised as Category 2 Participants who may enter bids on proprietary basis or may participate through an arranger/sub-arranger.
The arranger or sub-arranger or EBP shall ensure Know Your Client (KYC) of the participants before allowing them to make bids... In case the participants are Qualified Institutional Buyers , KYCs shall be ensured by EBP; and In case of other participants by the arranger or sub-arranger
The issuer shall ensure compliance with all requisite laws, rules, regulations, etc. with respect to private placement of debt securities.
The EBP shall be responsible for accurate, timely and secured bidding process of the electronic bid by the eligible bidders.
Participants shall be required to enroll with EBP before entering bids. However, enrollment of participants with EBP would not automatically qualify a participant to enter bids, as only eligible participants may participate in the bidding process.
Bid shall be made by way of entering bid amount in Rupees (INR) and coupon/ yield in basis points (bps).
Issuer shall have the option to accept or reject bids received, if the issuer agrees to the yield so discovered.
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Source: SecMarx — Electronic book mechanism for issuance of debt securities on private placement basis. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.