Pricing pressure: Sebi should avoid over-regulation

The idea of asking independent directors to justify pricing does not make sense

The Securities and Exchange Board of India’s (Sebi’s) attitude to initial public offerings (IPOs) appears to have swung from being liberal to over-regulatory within the space of two years, going by recommendations adopted at the last board meeting. While some new requirements involve additional disclosures that could help investors and issuers, others cannot be termed market-friendly. For instance, the regulator has proposed a committee of independent directors (IDs) justify the IPO-pricing band, using quantitative means. The pricing band will then be compared with the weighted average cost of acquisition of prior primary issuances and secondary transactions in the share. The