This refers to “Sebi panel proposes direct foreign listing” (December 5) by Samie Modak. The report says that an expert panel has come out with this idea. Let’s go back in history and examine similar ideas that came out of the Securities and Exchange Board of India (Sebi) and see who gained from those. Sometime in 1993-94, Sebi changed the rules on the amount of promoters’ contribution in an issue. Soon, the first major beneficiary came out with a giant issue. Then, sometime around 2005, Sebi, without even putting out a discussion paper, changed the rules on lock-in of promoter capital. Earlier promoters could not sell till a project was completed. This restricted period was reduced to just one year. Soon after this amendment, the same group which had come out with a huge public issue in 1993, came out with another. This begs a question: whose idea is the current one? Your guess is as good as mine.
While allowing direct foreign listing, why does Sebi not mandate foreign instruments issued by Indian companies to list in India? Shouldn’t mutual funds be allowed to convert part of their funds into foreign exchange to invest on behalf of resident Indians? The answer is simple: Only select people can make use of the arbitrage between the values of shares abroad and in India — and you know who they are.
T R Ramaswami Mumbai
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