Sebi simplifies procedure of trading rights on an exchange platform

The capital markets regulator, The Securities and Exchange Board of India (Sebi) on Thursday simplified the rights issue procedure by reducing the time between the end of trading in Right Entitlements (RE) on the stock exchange platform and the end of the issue.

According to a circular, trading in Right Entitlements on stock exchange secondary market platforms will begin concurrently with the opening of the offer and will close at least three days prior to the closing of the rights issue. The previous threshold was four days. Right Entitlements, like equity shares, are exchanged on stock exchange secondary market platforms with T+2 (trading plus two) rolling settlement.

Sebi said that the new framework will apply to all rights issues and fast-track rights issues with immediate effect.
This comes after Sebi received a market representation that if there are trading holidays between the last day of REs trading and issue closure, the minimum gap of four days may not always ensure that there are adequate days for settlement, as REs traded on the last day of the REs trading window must be settled within two working days.

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