Mumbai, India: In order to check transfer of equity and debt securities issued through public offers or other means even before listing, market regulator SEBI on Thursday barred activation of their ISIN codes till they begin trading on a bourse.
The ISIN (International Securities Identification Number) is a 12-character alpha-numeric code that uniquely identifies an equity, debt or other securities. The ISIN code serves the purpose of uniform identification of securities for their trading and settlement in the market.
After coming across fraudulent transfer of shares being allotted through IPOs even before the actual listing of the companies, SEBI in January 2006 had allowed activation of ISINs only after the commencement of trading on the stock exchanges in case of shares of the companies.
Through a circular issued Thursday, SEBI has now decided that in case of IPO for debt securities as well, the ISINs shall be activated only on the date of commencement of trading on the stock exchange.
Further, in order to curtail the transfer of additional issue of shares and securities through FPO, rights issue, preferential allotment and bonus issue of the listed company, the depositories would have to keep such securities frozen till final listing or trading permission is granted.
For this, SEBI has asked the depositories to allot such additional securities under a temporary ISIN which shall be kept frozen.
SEBI has asked exchanges to provide the details to the depositories whenever final listing or trading permission is given to securities.