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Tuesday, November 15, 2011

Sebi to revamp IPO process to check price manipulation

Market regulator Sebi today said it is looking at revamping the initial public offering (IPO) norms and putting in place a common KYC regulation for financial sector intermediaries.

"Whenever we find instances of violation (IPO norms), we will take deterrent action. It also calls for a relook at our entire IPO process. So we are doing that as well," Sebi Chairman UK Sinha told reporters on the sidelines of an ANMI event here.

He said very soon a regulation for centralised KYC (Know Your Customer) would be put into place for making the process easy. "We have decided to have a thorough review of our risk management system as the current system is more than 10 years old," Sinha said.

Earlier this year, the Securities and Exchange Board of India (Sebi) had decided to introduce a new short and simple form for IPO investors for increasing retail participation in the stock markets.

In the first half of the current fiscal, 30 companies have raised fund totalling over Rs 5,000 crore through IPOs.

Sources in the know of the move say that the market regulator is considering expediting the clearance of IPO offer documents. Companies have a one-year time to come out with public offers from the date of Sebi clearance.

Sinha further said that Sebi takes quick, effective and non-discriminatory action in case of market manipulation.

Speaking on the occasion, NSE Chairman and MD Ravi Narain said, "We want to have more products. But we are not interested in speculative products. However, any product which manage volatility and eliminate systems risk are welcome."

Sinha said the cost of trading has gone up in the country and that Sebi has taken up the issue with the government.

"It is now time for having a re-look at the Securities Transaction Tax (STT). Sebi has taken it up with government," he said.

The government had introduced STT in 2004 on transactions in different types of securities. The rate presently varies from 0.025% to 0.25% depending upon the type of security traded and transaction ? whether sale or purchase.

Sinha further supported the call for bringing the investments of EPFO and retirement fund to the stock market.

"I would recommend that we engage the labour leader and the trustees of such fund to tell them how the market functions," he said.

Echoing similar view, Narain said, "We should look at new pension scheme (NPS) and Employee Provident Fund to increase participation in the markets."

Source: Business Standard


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