SEBI streamlines process of trading in Right Entitlements on exchange platform

NEW DELHI: Capital markets regulator SEBI on Thursday streamlined the process of rights issue pertaining to a minimum time period between the closure of trading in Right Entitlements (RE) on the stock exchange platform and closure of such issue.

Under the new framework, trading in REs on the secondary market platform of stock exchanges will commence along with the opening of the issue and will be closed at least three days prior to the closure of the rights issue, according to a circular.

Earlier, the requirement was four days.

REs are traded on the secondary market platform of stock exchanges, with T+2 (trading plus two) rolling settlement, similar to the equity share.

The new framework will be applicable for all rights issues and fast track rights issue with immediate effect, the Securities and Exchange Board of India (SEBI) said.

This comes after SEBI received market representation that in case there are trading holidays between last date of REs trading date and issue closure, provision of minimum gap of four days may not always ensure that there are adequate days for settlement, as minimum two working days are required for settlement of REs traded on last day of REs trading window.

REs traded on exchange platform have T+2 rolling settlement.

It was further represented that there should be a minimum gap of three working days considering two days for settlement and one additional day for investors to make application in rights issue.