The markets watchdog Securities and Exchange Board (SEBI) is planning to make the initial public offering (IPO) process easier and faster by simplifying the entire procedures with a focus on reducing the listing time to four days from six now.
The SEBI has already reduced the listing time from the seven days in the past to six days after the close of the bidding. This still blocks the fund of an investor if she/he could not get the entire subscription locked in for those many days time.
Earlier, the regulator had ended the practice of allowing the issuer to block the entire subscription amount in demat accounts by allowing the money to be blocked in the investor's account through the Absa facility. This helped not blocking the investor's money in a third party account till the IPO process was over.
"We are further simplifying procedures and focussing on reducing the listing time for IPOs so that primary markets become more efficient. The focus is further cut down on the time taken for listing a company on an exchange after the IPO to four days from the six days now," SEBI chairman Ajay Tyagi told reporters at an investment banking summit here today.
Noting that the IPO markets are very satisfying, he said "the amount of funds raised through the primary issues this year is more than six years combined."
Crediting government policies and sustained reforms as well as improvement in ease of doing business, apart from enabling regulatory framework, he said formalisation of the economy after the note-ban, softer interest rate regime as well increasing public awareness about mutual funds have boosted demand side, while very good issues have helped the supply side.
Underlining the need for stable regulations, Tyagi said as a regulator he wants to maintain a balance in regulations because any overburden will lead to lower investments from coming in to the economy.
On pending IPOs, he said of the 86 issues filed, SEBI has given final comments on 66 and 20 are pending.
Underlining the role of investment bankers in the success of IPOs and in increasing retail participation, he said "advisors should convince or advice issuers about the right pricing" so that there is something on the table of the investor as well.
Frowning upon the increasing tendency of promoters to tap the rights issues and the higher pricing of such stocks, Tyagi said ideally there should not be so much requirements as these companies are already public. The issues have been less this year. We will examine how to make it simpler.
Lauding the mutual funds for widening the investor participation in the markets through the MF route, he said the AUM of the industry is very good at over Rs 21 trillion now which is one-fifth of the banking sector.
Calling for more retail participation in the markets, he said at 1.5 crore this is still very low, but he noted that retail participation is more than doubling every year.
To help the MF industry grow in a more transparent manner, he said the SEBI has created a division exclusively to focus on mutual funds and working with the fund houses so that there is no miss-selling.
On the derivatives market, which he described as a good story in terms of turnover, he said the SEBI has come out with a consultation paper on derivatives and will take a final view by end of the financial year.
"Since there is criticism that uninformed investors are investing, we've received feedbacks on the consultation paper on the same and will take a view on investor protection soon," he said.
On the demand for interest rate options and money market futures, he said the exchanges are looking into both.
He said as of now as many as 27 central public sector entities are yet to achieve the minimum public float norms as government has given another one-year extension to them this year.