ANMI welcomes Sebi move to compensate retail investors

The Association of National Exchanges Members of India (ANMI) has welcomed market regulator Sebi's announcement that retail investors applying for shares in IPOs will need to be compensated if bankers fail to make the allotment despite their eligibility.
Putting in place a framework to compensate retail investors who fail to get securities in an IPO, Securities and Exchange Board of India (Sebi) recently said there should be a uniform policy for calculation of minimum compensation payable to investors.
Welcoming the move, ANMI president K Suresh said, "The step would go a long way in protecting the interests of retail investors. It will also complement the process of applications supported by block amount (ASBA), which has, to a great extent, eliminated complaints of retail investors whose monies get blocked during IPOs or are not allotted shares on time".

"With the new rule in place, investors will get their refunds and allotments in a time-bound manner or would be compensated for any financial or opportunity loss," he added.
ANMI said in a statement that the framework for compensation will force the banks to complete the process of share allotment and compensation on time.
"The need for a compensation system is very pertinent since if the allotment of shares is done on time, the investor wouldn't miss the opportunity to sell shares and lock in the listing gains," Suresh said.

Suresh also noted that Sebi decision is a "major comfort step to get more Indians to participate in equity investments".

"While the overall participation, as indicated by the number of demat accounts, is going up steadily, it is clear that India as a nation is much behind others when it comes to people investing in equities," Suresh said.
"ANMI is clear that this move will encourage retail participation in the primary market and, by extension, in the secondary markets," he added.