Market regulator Sebi has extended the Application Supported by Blocked Amount facility (ASBA), which was until now available only to retail investors, to all other investors including corporates and high-networth individuals (HNI).
The second phase of ASBA would be available to all issues opening on or after January 01, 2010.
ASBA was first introduced by Sebi on July 30, 2008. With this facility, the money from investors who bid in IPOs does not leave the bank account until allocation takes place. The amount is frozen in the account itself, which does away with the inefficiencies of refunds in the case of non-allocation.
“The problems in such issues are common to all classes of investors and the move should have some impact on increasing the use of the facility,” said Mayank Shah, CEO of Anagram Securities.
Since the introduction of ASBA, it has been used in more than 20 issues. C B Bhave, chairman of Sebi, had suggested that a quarter of retail investments now take place through the ASBA route.
Other restrictions which had been in place in the first phase of implementation have also been removed. Earlier, only retail investors could apply, there could only be one bid, and application could take place only at the cut-off price. These and other restrictions have been removed in the second phase of ASBA, which is applicable to all investors except qualified institutional buyers (QIBs).
All intermediaries involved in the process, including registrars, exchanges and banks have been asked to make any modifications to their systems and certify to Sebi their readiness by December 25.
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