Regulator to plug market loopholes
After the Reliance Power experience, SEBI wants to change the way initial public offers are made
INVESTORS PUTTING their money into initial public offers (IPOs) of shares may soon get a respite from committing funds with no guarantee of quick allotment or refund. The Securities and Exchange Board of India (SEBI) plans to drastically cut the allotment time to less than five days from the current 21 days. Also, the entire thing will be done online to ensure speedy clearance of applications. The current proposals, being formulated by a SEBI panel, assume significance after the Reliance Power issue, which raised questions as to whether bankers and promoters had time to play with applicants' cash. Top SEBI sources said the regulator believes that physical application forms must be done away with and replaced with online applications. "Since demit accounts have all the relevant information, and bank accounts are online, it is possible to make fresh applications by putting in the demit account number and online payment instruction," a member of the primary market committee told Hindustan Times. "What is the need of putting so much of repetitive information and creating complicated application forms?" he said. The committee is due to meet again in early February and take a final decision on recommendations to be put up to the SEBI board. However, the proposals may not become rules soon enough to affect a spate of forthcoming IPOs. Some 35 companies plan to enter the market by March to mop up around Rs 20,000 crore. The new norms are expected to take effect in March or April, sources in the committee said. Physical applications, particularly in mega issues, involve a logistical nightmare. The forms also require all sorts of details. The new proposals aim at making...
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Image and Article source: Hindustan Times
Article taken from the issue: 28 Jan 2008
INVESTORS PUTTING their money into initial public offers (IPOs) of shares may soon get a respite from committing funds with no guarantee of quick allotment or refund. The Securities and Exchange Board of India (SEBI) plans to drastically cut the allotment time to less than five days from the current 21 days. Also, the entire thing will be done online to ensure speedy clearance of applications. The current proposals, being formulated by a SEBI panel, assume significance after the Reliance Power issue, which raised questions as to whether bankers and promoters had time to play with applicants' cash. Top SEBI sources said the regulator believes that physical application forms must be done away with and replaced with online applications. "Since demit accounts have all the relevant information, and bank accounts are online, it is possible to make fresh applications by putting in the demit account number and online payment instruction," a member of the primary market committee told Hindustan Times. "What is the need of putting so much of repetitive information and creating complicated application forms?" he said. The committee is due to meet again in early February and take a final decision on recommendations to be put up to the SEBI board. However, the proposals may not become rules soon enough to affect a spate of forthcoming IPOs. Some 35 companies plan to enter the market by March to mop up around Rs 20,000 crore. The new norms are expected to take effect in March or April, sources in the committee said. Physical applications, particularly in mega issues, involve a logistical nightmare. The forms also require all sorts of details. The new proposals aim at making...
To read the complete article click here..
To read the complete e-paper click here: epaper.hindustantimes.com
Image and Article source: Hindustan Times
Article taken from the issue: 28 Jan 2008
Labels: IPO's, loopholes, market, Reliance Group, Reliance power
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