Separate days for institutional, retail investors in IPOs: Sebi

In what could be a major overhaul of the way public offers are conducted, market regulator, Securities and Exchange Board of India (Sebi) is mulling over a possible demarcation of days to be given to retail and institutional investors for submitting their bids.

As part of efforts to attract more retail investors to the stock market, Sebi is considering a proposal wherein the institutional investors would be first asked to submit their bids, possibly in the first two days, and then the remaining two days would be open only for retail investors, provided the IPO is open for four days.

The move is being considered because retail investors have been traditionally following the cues from the demand generated among the large institutional investors and put in their bids on the last day, but in the recent IPOs the institutional investors have also been seen waiting till the last moment.This has led to a large chunk of retail investors missing on the opportunity to invest in the IPOs where institutional investors have come in during the last hours, a senior official at a leading merchant bank said.

The banker said such problems have been aggravated in the recent months as investors have not been able to reap any big returns and have lost money in some IPOs, thus making them hesitant to put in their bids. The proposal of earmarking separate days is currently being discussed by the Sebi’s Primary Market Advisory Committee as part of its efforts to revive retail investors’ interest in the public offers.