SEBI Introduces AI-Powered Template for Streamlined IPO Filing Process

File IPO papers with fill-in-the-blanks template, AI will process: Sebi chief

SEBI, under Madhabi Puri Buch, is using AI to streamline IPO applications, aiming for faster approvals through template-based forms. Buch reassured industry leaders that SEBI focuses on compliance, not minor details like application language. Recently, SEBI returned IPO filings from several companies, emphasizing India's global leadership in IPO numbers.To minimize IPO application delays and clearing time, Sebi chief Madhabi Puri Buch on Friday said the markets regulator is working to start a template-based fill-in-the-blanks kind of application form which will be processed with the help of artificial intelligence (AI). "We have already implemented artificial intelligence (AI) within Sebi for processing of public documents. For instance, a human used to read and see whether the annual report of a REIT or an InvIT is in compliance or not is being done by AI now. The officer validates it and also does some manual checks but 80% of the work is done using AI," Buch told market participants at a FICCI conference. The regulator is also working on AI-based processing of IPO documents with the final approval coming from an officer. "The normal track (of processing of IPO applications) would be so fast that you won't need fast track," she said. To demystify the entire process of IPO filing and making it easier for all the young companies waiting to list, Buch said the team is working on starting a templatised fill-in-the-blank form which will make it simpler. "We need to bring time for clearing applications for capital raise to a minimum," Buch said while assuring industry leaders that Sebi never rejects an application for reasons like active or passive voice used in the application. IPO applications are rejected when, for example, a director of the merchant banker was allotted shares before the IPO or the merchant banker is under Sebi investigation. Earlier in the week, Sebi had returned IPO papers of Vishal Mega Mart, education NBFC Avanse Financial Services, PE firm TPG Capital-backed Sai Life Sciences, and BMW Ventures. During the event, Buch also cited data showing that India ranks No.1 on the global map in terms of number of IPOs and issuances anywhere in the world with almost one issuance every trading session. Sebi had recently released a consultation paper proposing a series of seven measures to control the excessive retail frenzy in the derivatives market.

SEBI Has Started Using AI For IPO Documents Processing: Madhabi Puri Buch

The market regulator is also coming up with a new institution called the performance validation agency to validate claims related to investment advice Market regulator Securities and Exchange Board of India (SEBI) has started leveraging the power of artificial intelligence (AI) for the processing of initial public offering (IPO) documents. Speaking at the FICCI 21st Annual Capital Markets Conference, SEBI chairperson Madhabi Puri Buch said, "We have already implemented artificial intelligence within SEBI for processing public documents." "For instance, let's say a REIT annual report or InvIT annual report, earlier what a human being used to read and see whether the annual report is in compliance with our norms, etc, (but) now AI does that. The (SEBI) officer validates it and also does some manual checks, but 80% of the work is done through AI," said Buch. The SEBI chief spoke about the usage of AI when asked about demystified prospectus and their auto-clearance without going through scrutiny. She added that AI-based processing of IPO documents will naturally fast-track the process. The development comes at a time when the usage of AI has leapfrogged at enterprises and new-age businesses across sectors, particularly with GenAI making business processes more seamless and increasing productivity at a lowered time. In fact, Buch also stressed the importance of leveraging technology and innovation. "The theme of technology, which is underlying the entire country today, will continue to drive SEBI and I would urge that all the market participants adopt Regtech, because we are rapidly adopting Suptech. A lot of the supervision we now do, and it's not just market surveillance, it's inspection, and all of that, is now using technology," said Buch. The SEBI chief also urged companies to proactively start adopting innovation and technology. "If you have to be proactive and know what's happening in your setup before we get to know... If you don't have the technology, you will be surprised by what we dig up," she said, pointing at the compliances required during the IPO processes. Meanwhile, as per Buch, SEBI is also trying an innovation in the organisation, a new institution called the performance validation agency to validate claims related to investment advice.

IPO: Sebi Chief Madhabi Puri Buch Says Working on Template Where Companies Can Simply Fill in the Blanks For Approval - News18

Sebi chairperson Madhabi Puri Buch on Friday said the capital markets regulator is working on a mechanism to expedite IPO approvals, where companies can simply fill in the blanks in a template to get the go-ahead. Separately, Sebi is also developing an artificial intelligence tool to check IPO documents being filed by companies for faster approvals, Buch said speaking at the Capam event of FICCI and added that this tool should be in place by December. Stating that a mystique has been built around the IPO process like filing of a complex draft red herring prospectus, Buch said the attempt is to demystify the process now. Elaborating on the "demystified offer document" aspect, Buch said Sebi is working on a process which will have a template where companies can just fill in the blanks to prepare the IPO document. There will be a separate column for articulating any complexities and explaining the variations on a particular aspect, she said. "The document will be precise, meaningful and any variation will be explained separately," she said, adding that the new process will smoothen the processing time and also demystify the process. She, however, did not spell out a timeline for implementation of the plan or also the process that will be followed in the run up. Apart from this, the regulator is also working on a new process of fundraising for listed companies, which will be a combination of rights issue and a preferential allotment. The overall duration for end-to-end process for getting the go-aheads will nearly halve to 23 days from the present 42 days for preferential issues, which is the fastest route of fundraise, she said. Under the innovation, the watchdog is eliminating the need for getting approval from Sebi and will also do away with the requirement for merchant bankers as the fundraising document will be a simple two-page one listing out the necessary details for investors precisely. Buch said this innovation, which will potentially deprive merchant bankers of the fees, is a homegrown solution and the idea has not come from the industry. Sebi will be bringing a consultation paper on this idea before moving ahead with the proposal, she said, adding that the process will be cost-effective and faster. Buch said making the IPO process faster has been a key objective for her, and pointed that there are eight applications which have exceeded the three month threshold at present due to lack of necessary regulatory approvals, judicial interventions and some non-compliances. She also said that Sebi has taken an approach where it prefers to return documents when it discovers things like conflict of interest at merchant bankers' ends, directors being accused of fraud, objects of issue not being clear or it being simply incomplete. "We return the documents to unclutter the path so that the genuine applications are not delayed," she added. The new system of demystified offer document will help the young companies in its listing process, Buch said, adding that Sebi is also working on rationalising the disclosures to be made by a loss-making company in its listing. The possible solutions will be out in a month, she said, adding that the solutions are being found courtesy the deliberations at the industry standard forum (ISF). The Sebi management will also be taking the ISF to its board with the intent of formalising it, she said. The board will also be seen deliberating on a proposal to streamline the ongoing disclosures to be made under the listing obligation and disclosure requirements (LODR) framework which have been formulated in consultation with the industry. To help the errant companies who are in violation of securities laws, the regulator has also put in place a settlement amount calculator on its website, she said. It is also working on a benchmarking agency which will help compare the performance of infrastructure investment trusts and real estate infrastructure trusts, she said. Buch also urged the market ecosystem to swiftly adopt solutions offered by regulatory technology companies, adding that this is necessary because the regulator is adopting supervisory technology (Suptech) solutions at a fast pace. Speaking at the same event, largest equity bourse NSE's chief executive and managing director Ashish Kumar Chauhan urged small investors to desist from trading in derivatives. He said buying in the morning and selling in the evening should not be confused with "investing", and pitched for right regulations and compliance to it amid the "euphoria". Ficcis president and auto major Mahindra and Mahindra's chief executive Anish Shah said it is necessary for the private companies to push the pedal on investments for driving economic growth. He said for the last three-four years, India's growth is led by government capital expenditures and private capex has been lagging.

AI-based IPO documents processing soon? What Sebi chief Madhabi Puri Buch said

Read more: Stock market crash: Investors lose ₹4 lakh crore after Sensex falls 800 points She also said that 80 percent of processing work is done through AI. She added, "We are working on AI-based processes of IPO documents but with the assurance of the investor that we have looked through it." Speaking about exercising numerous inspections and circulars on corporate papers she said, "My understanding is that we have combined NSE, BSE, depository, Sebi inspections. That was done four or five years ago." She explained, "Our regulation keeps pace with innovation, otherwise we will be like policemen in Hindi movies.... where after the hero and villain have finished fighting (we will arrive)... (but) we need to arrive at some point." Sebi is also in the process of finalising two new innovations - a combo product of rights issue and preferential allotment. She said, "One of the innovations you are going to see very soon, that we have a positive response for is a combo product of a rights issue and a preferential allotment."

SEBI working on various initiatives to streamline IPO process and enhance transparency-Madhabi Puri Buch

The SEBI Chairperson was speaking at an event of the 21st annual capital markets conference /capital market reforms 2.0, Viksit Bharat in Mumbai. She mentioned that to aid companies in the IPO filing process, the market regulator is also planning to introduce a demystified filing document. "This initiative aims to simplify the requirements and make the process more accessible to companies" said Buch on the IPO filing process. The SEBI Chairperson also added that clearing time for IPO applications should be brought to a minimum and emphasized the importance of reducing the ageing of applications. Buch also highlighted that India leads the global tally in the total number of IPOs issued. The market regulator is also planning to release a consultation paper aimed at strengthening the framework for Rights Issues and Preferential Allotments. Buch added, that in terms of the amount of capital raised & stock exchanges, Indian markets are at number five globally. Indian markets have given a compounded growth of 49 per cent in the last five years which no other major economy did. "If you look at the compounded growth rate of 49 pc over the last five years, nobody is equalling our growth rate," said Buch. She also highlighted that the NSE is also working on a process to use AI technology to process IPO documents and now AI has also entered into the processing of REIT annual report or an INVIT annual report. "We are working on AI-based processing of IPO documents. So we should be like this but with the assurance to the investor we've looked at it" added Buch. Talking about the growth of the Indian economy Buch said the financial economy is very important for the goal of Viksit Bharat. "An extremely important pillar for Viksit Bharat is the economy, the real economy, the financial economy, the markets. It is a matter of pride to us that in the global lead tables, India ranks number one in the total number of IPOs and issuances in the world" said Buch. (ANI)