The Securities and Exchange Board of India (Sebi) took various initiatives in 2012 to make the initial public offering (IPO) process more investor-friendly. Sebi chairman UK Sinha, however, believes that “discipline” is still missing among the investment banking community when it comes to pricing IPOs.
In an exclusive interaction with FE, Sinha said the capital market watchdog has taken “serious note” of the way IPOs are priced and will soon introduce the concept of a safety net to bring in more discipline.”Mandatory safety net is another proposal at the consultation stage, which is aimed at bringing in more discipline in pricing,” Sinha told FE, adding that apart from pricing, the IPO market faces two other concerns — infrastructure availability and investor sentiment.
According to Sinha, the capital market watchdog implemented various fundamental and structural changes in 2012 after factoring in the macro-economic and market-specific indicators. “We felt mere window-dressing and incremental changes would not do. We embarked upon some fundamental and structural changes in the way markets should function... for drawing household savings from across the length and breadth of the country into the market,” said Sinha.
Interestingly, the Sebi chief also conceded that there was a need to bring in more discipline in the way the regulator should function. “The focus of Sebi during the year has been to bring about more discipline on itself. One such example is transparent criteria for rejecting consent requests which has given a very clear cut signal to the market,” he said.
Sinha pointed out that nearly 8,000 basic services demat accounts have been opened in the last four months since Sebi introduced the concept aimed at retail investors. Further, SCORES — an online grievance redress system — has been a huge hit with investors, with nearly 21,000 grievances received in the last nine months.