Description

BSE mandates trading members must obtain prior physical or electronic instructions from clients before placing IPO bids on their behalf, following non-compliance observed during inspections.

Summary

BSE has issued a compliance reminder to trading members regarding IPO bid placement procedures. Inspections revealed that some trading members uploaded IPO bids without obtaining prior instructions from clients. Trading members must obtain physical or electronic instructions from clients before placing any IPO bids, as mandated by SEBI circulars from 2018-2019.

Key Points

  • Trading members were found uploading IPO bids on behalf of clients without prior authorization during BSE inspections
  • Prior physical or electronic instructions from clients are mandatory before IPO bid placement
  • Investors must submit complete bid-cum-application forms to designated intermediaries
  • Intermediaries must provide acknowledgement to investors upon receipt of applications (counter foil or application number)
  • Physical application forms with UPI payment must be retained for 6 months, then forwarded to issuer/Registrar
  • Electronic application records must be maintained for minimum 3 years
  • Clients can also submit IPO bids through online platforms using secure login credentials

Regulatory Changes

No new regulatory changes introduced. This circular reinforces existing SEBI requirements from:

  • SEBI/HO/CFD/DIL2/CIR/P/2018/138 dated November 1, 2018
  • SEBI/HO/CFD/DIL2/CIR/P/2019/76 dated June 28, 2019
  • SEBI/HO/CFD/DCR2/CIR/P/2019/133 dated November 8, 2019
  • Exchange Circular No. 20191111-7 dated November 11, 2019

Compliance Requirements

For Trading Members:

  • Must obtain prior instructions (physical or electronic) from clients before placing IPO bids
  • Cannot upload IPO bids on Exchange platform without client authorization
  • Must provide acknowledgement to investors upon application receipt
  • Must retain physical application forms (UPI payment mechanism) for 6 months
  • Must maintain electronic application records for minimum 3 years
  • Must ensure compliance with all SEBI/Exchange circulars on IPO bid placement

For Investors:

  • Must submit complete bid-cum-application form to designated intermediaries
  • Can submit bids through online platforms using secure credentials

Important Dates

  • Circular Issue Date: October 30, 2025
  • Effective Date: Immediate compliance required
  • Record Retention: Electronic forms - 3 years minimum; Physical forms with UPI - 6 months

Impact Assessment

Operational Impact: Trading members must review and strengthen their IPO bid placement processes to ensure proper documentation of client instructions. This may require enhanced internal controls and audit trails.

Compliance Impact: Non-compliance could result in regulatory action. Trading members found placing unauthorized bids face potential penalties and scrutiny during inspections.

Market Impact: Minimal direct market impact. Ensures investor protection and maintains integrity of IPO bidding process by preventing unauthorized bid placement.

Investor Impact: Positive for investor protection, ensuring trading members cannot place IPO bids without explicit client authorization.

Impact Justification

High importance due to compliance violation findings during inspections requiring immediate corrective action. Medium impact as it affects IPO bidding processes for trading members but does not alter market structure.