Street signs: False start for ARCL, encouraging GMPs for SBFC, and more

A false start for AMC Repo Clearing

AMC Repo Clearing (ARCL), a limited-purpose clearing corporation (LPCC) backed by the Securities and Exchange Board of India and funded by asset management companies, showed a lot of promise on the day of launch. However, the platform hasn’t reported any trades since then. When Finance Minister Nirmala Sitharaman inaugurated the platform on July 28, it recorded a turnover of Rs 480 crore across 12 trades. According to people in the know, industry players are yet to fully warm up to the idea of an LPCC, and ARCL is engaging with corporates, primary dealers, and other participants to give it a push. Also, during the week gone by, there were some orders placed on the ARCL platform but not executed as they were below the government security rate, leading to a demand-supply mismatch.

Sebi gets rap over‘lack of evidence’

The capital markets regulator, the Securities and Exchange Board of India (Sebi), received criticism from the Securities Appellate Tribunal (SAT) last week for meting out harsh punishment in a case that dates back over a decade. “The basis for the issuance of the show cause notice is patently false and is not based on any material evidence. We are consequently constrained to observe that a regulator, while proceeding against any noticee, must proceed on the basis of some material evidence, which in the instant case was lacking. It was not a case of insufficiency of evidence but a case of lack of evidence,” the tribunal said, quashing an order passed by Sebi’s whole-time member in October 2021. Legal experts said SAT’s observation in a matter pertaining to a small individual trader shows that the regulator has to be meticulous in both big and small cases.

Encouraging grey market premium for SBFC, Concord

The initial public offerings (IPOs) of SBFC Finance and Concord Biotech, which close over the next two days, hold promise if grey market premiums (GMPs) are anything to go by. The GMP for SBFC, whose Rs 1,025 crore IPO was subscribed 6.3x on the penultimate day, had shot up from 65 per cent to 70 per cent despite volatility in the secondary market. Meanwhile, Rakesh Jhunjhunwala family-backed Concord Biotech’s shares were seen changing hands at a GMP of 25 per cent. Concord’s Rs 1,551 crore IPO was subscribed 57 per cent on the first day. In recent months, GMPs have been a good indicator of how the IPO will perform. However, if market conditions turn volatile, such predictions can go wrong. At the top end of the IPO price, SBFC is valued at Rs 6,066 crore, and Concord at Rs 7,752 crore.