Sebi to reform IPO norms to check volatility on listing day

Markets regulator the Securities and Exchange Board of India (Sebi) today said it was in the process of reforming the initial public offer (IPO) norms to ensure minimum price volatility on the day of listing.

"We are in the process of reforming IPO process which will ensure that much safer process and volatility in the initial days of listing is much less... We are looking into every aspect," Sebi whole-time member Rajeev Agarwal said.

"Our aim is that the volatility in the IPOs should not be there, particularly on the listing day," he said on the sidelines of an Assocham event here.

He also said that the disclosure norms should be such that investors should not lose money.

Last month, Sebi barred seven companies from raising money from the public for suspected misuse of proceeds from IPOs, pricing irregularities and inadequate disclosure of information.

The regulator also barred six investment bankers from managing any more share sales for alleged failure of due diligence in overseeing the IPOs.

The merchant bankers who have been prohibited from participating securities market, include "PNB Investment Services, the book running lead manager of IPO of Taksheel Solutions and Almondz Global Securities [PG Electroplast and Bhartiya Global Infomedia]". Their CEOs, too, have been barred from participating in the capital market till further order.

"...By not complying with the regulatory obligation of making the disclosures, the Company and its Directors had not provided the vital information which is detrimental to the interest of investors in securities market," Sebi had said in order against Taksheel Solutions said.

Agarwal said the industry should make efforts to channelise more savings into capital markets to fund capital requirements of various sectors. Only 4.6% of national savings are invested in capital markets.

There is need to broaden and deepen market, he said, adding, products have to be developed for rural India based on their needs and requirement.