Securities and Exchange Board of India (Sebi) chairman UK Sinha on Tuesday said an overhaul of the IPO process was on the cards, including a close look at the volatility in prices on the day of listing. Exhorting the corporate sector to create a better compliance culture, Sinha said, ?The focus of senior management on compliance is lacking.?
Addressing a CII conference on capital markets, the Sebi chief added that the regulator intended to initiate a slew of measures to make fund raising quicker, easier and less costly for companies but that would mean some additional obligations for intermediaries. ?The IPO process is quite old and we would like to do a complete review of it,? Sinha said.
Putting the onus on merchant bankers to complete their due diligence in time, he announced that Sebi proposed to put in place a time-frame within which firms would need to respond to queries relating to IPOs by the market regulator. ?Sebi is blamed for delaying the release of the DRHP but we have found that if the market is not good companies don?t respond to our queries. So from now on companies will be obliged to respond within a time frame and if they don?t Sebi will close the case,? Sinha said, adding that the regulator intended to shorten process of clearing IPO applications as also the listing process.
The Sebi chief said the regulator was looking at the kind of penalty that could be imposed for irregularities relating to volatility on the day of listing. ?We are looking at the volatility at the first day of trading, we are seriously working on that,? he said.
Sinha also called for relooking the grievance redressal mechanism since most cases were being settled in favour of the intermediary rather than the investor. ?We have received complaints even from HNIs who are frustrated,? Sinha said.
The response to the new regulations for distributors, the Sebi chief said, had evoked criticism. ?We need to ensure that growth is not impacted and also that everybody is taken care off,? he said, adding that it had been noticed that at times there was a conflict of interest between the distributor and the financial advisor. ?We will move even if there are complications,? Sinha said.
He added that Sebi?s rules for alternate investments too had been criticised but said that some of the concerns were misplaced.
?There is a difference between raising money overseas and from within the country,? he expalined saying that customer protection was needed in India. Moreover, government policies relating to various sectors needed to be followed.
The final rules would be announced soon. Sinha announced that Sebi is also appointing an international consultant to look at the regulator?s organisational structure and working.