Sebi tweaks OFS norms; abolishes 25% margin requirement
To make it easier for companies to comply with public shareholding norms, Sebi today decided to abolish the 25 per cent margin money requirement for entities bidding through the auction route.
The market regulator has also said that indicative prices during Offer for Sale (OFS) or auction route, should be disclosed throughout the trading session.
Sebi said these decisions would make the OFS mechanism "more economical, efficient and transparent".
"We have provided now that in today's meeting that earlier requirement of 25 per cent margin will be removed. It won't be a requirement mandatorily," Sebi Chairman U K Sinha said here.
Speaking to reporters after Sebi board meeting, he said that people or institutions can come without any upfront margin but they have to follow certain conditions.
"One is they cannot revise it downwards and they cannot withdraw this bid. In all these cases, the rules of secondary market will be followed," Sinha said.
OFS route is being introduced because many participants have expressed their difficulty in following 25 per cent minimum margin requirement at the bidder stage, he added.
Sebi said that institutions may place orders/bids with 100 per cent upfront margin and modification/cancellation of such orders/bids shall be permitted.
"Custodian confirmation shall be within the trading hours. However, the settlement of funds and securities shall take place on T+1 (next day after transaction) day," it added.
Further, institutions can place orders without upfront margin in line with secondary market practice. "However such bids/orders cannot be modified /cancelled, except upward revision in the price or quantity," Sebi said.
"Indicative
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