GRIP seeks big role for small investors

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SEBI monitoring market situation closely

a lot of money that cannot be locked in for such a long time. Secondly, some people have raised the issue of funds that remain with banks. That issue will also be automatically addressed once we reduce the gap,” Bhave had said at a press meet that followed the board meeting.

Primary market analyst Prithvi Haldea says, “The move will bring sanity into subscription levels during IPOs.”

Reduction in the time gap would also help in discouraging the grey market for shares.

The GRIP report argues that the period between the close of an issue and its listing should be lowered to seven days from the current 21 days, while some officials involved in the policy-making process said it should be cut to three days. A final decision would be known once the markets regulator firms up its views on this.

Sebi has already cut the settlement period in secondary market from T+42 days to a mere T+2 days, that is, 2 days after the transaction. A similar reform is possible in the primary market too. “There is an urgent need to close this time gap so that retail investors' money is not locked for 21 days,” says Haldea.

GRIP has further suggested that the government should do away with physical filing of application forms. Instead, the entire process should be made online using the Internet and the existing broker network in the country. A central integrated platform (CIP) can be created in order to drastically reduce the time gap, the report said.

Various other measures have been suggested to speed up the IPO process. The panel has recommended that companies be permitted to file a draft offer document with Sebi even if they are yet to receive authority for issue of capital and the high court approvals for mergers/de-mergers.

This would help in saving the time, which is otherwise spent in obtaining these approvals first and then filing the draft offer document, says the report.

According to sources, Sebi’s primary markets advisory committee (PMAC) has begun discussions on the GRIP report. Some critics argue that suggested reforms are half-hearted, as they do not address the problem of low-floating stock.

“We are euphoric about our market cap, but a major part of it is illusory as the floating stock remains very low,” argues a senior government functionary, requesting anonymity.

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