Sebi meet today on IPO grading, short sales

The Securities and Exchange Board of India's (Sebi) board is meeting in Delhi tomorrow to discuss the mandatory grading of initial public offers (IPOs), short-selling by institutions, and setting up an exchange for small and medium enterprises (SMEs).

It is believed that the Sebi may make it mandatory for IPOs to go for grading by rating agencies, at least for a period of six months. At present, grading is only optional.

The primary market committee of the market regulator is learnt to have recommended such a measure in a move to prevent companies of dubious nature from using the current rally in the market and raise funds from the primary market.

It is expected that short-selling will be allowed only in those counters which are very liquid. Short-selling is permitted for retail investors but prohibited for institutional investors.

Further, there is a feeling that the stocks that are also very active in the derivatives segment will get the nod.

Sources said the Sebi was also likely to discuss the possibility of allowing the setting up of a separate bourse for the SME sector. Another possibility is the revival of Over the Counter Exchange of India. It is felt that SMEs are finding it difficult to see enough liquidity and demand from investors on the Bombay Stock Exchange in the current scenario.

The Sebi board is also expected to weigh delivery-based settlement in the options segment. The move is aimed at reviving the now illiquid options segment.

Also, the board is expected to discuss and clear the issues related to real estate mutual funds. The funds, once allowed in the country, will give domestic investors a new, interesting tradable product in a booming sector.