The ticker at Sebi Bhavan

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Thursday , March 06, 2008 at 2322 hrs The new boss at Sebi Bhavan, the imposing headquarters of the Securities & Exchange Board of India (Sebi), the capital market regulator, has already begun making his presence felt. Chandrasekhar Bhaskar Bhave, who has returned to Sebi after a fruitful stint as the head of the country’s first and largest depository—National Securities Depository Ltd (NSDL)—is typically someone who lets his bat do the talking. And so it has been in the first few days since he took charge on February 18.

One of the first moves by Sebi under Bhave was a fresh attempt to tighten the insider trading rules, often seen as leaving enough scope for manipulation despite periodic tinkering. And the first major statement from the market regulator, after its first board meeting under Bhave, has set the tone for some major reforms.

Sebi’s decision to constitute a panel to explore ways of collapsing the time between an initial public offer (IPO) hits the market and lists for trading strikes at the heart of the primary market problem, something which the new Sebi chief has had enough opportunity to examine from close quarters both in his earlier stint as the senior executive director in charge of primary markets at Sebi and also as NSDL boss.

There have been enough episodes recently in the grey market where investors had burnt their fingers after playing in the unofficial market and then finding the stock list below par. The grey market has been a menace which rears its head from time to time, depending on market buoyancy. Of late, whenever a high-profile IPO comes along, frenetic activity begins in the grey market, with astronomical unofficial prices often taking a heavy toll on investors.

The basic reason why the market still exists is because there still is enough time between the IPO and the listing. The panel Sebi has now constituted will take stock of the mechanics of how this time can be shortened, and how the existing stock exchange and broker infrastructure can be used for this.