Sebi to make grading of maiden floats mandatory

The Securities and Exchange Board of India is planning to make IPO grading mandatory from the next fiscal. Sebi chairman M Damodaran told reporters here today that the board would decide on the proposal by April 15.

According to him, the primary market advisory committee, headed by HDFC chairman Deepak Parekh, had given a recommendation recently to make the IPO grading mandatory. "They feel that the grading should not be optional rather it should be mandatory because it will lead to better disclosure and is good for small investors," he said.

Damodaran said the committee felt that the grading could be funded from the investor protection fund of exchanges as well Sebi.

"Our board has yet to take a view on this, but I feel that it will be discussed in our board meeting in March-April," he added.

Damodaran said grading of an IPO usually costs around Rs 3-4 lakh and could be easily funded by the exchanges. "We are now working on a pilot project as far as IPO grading is concerned and Crisil, Care and ICRA are the agencies involved in this," he added. Damodaran informed that since the introduction of optional IPO grading, 11 companies had availed the facility.

"We feel that if the process is funded by the exchanges then the companies coming for IPO do not have to incur extra cost. Besides, the exchanges can use the data on their website. In case of dual listing, both the exchanges have to share costs," he added. UIN may return

Sebi is contemplating to reintroduce a unique identification number for investors. It may be noted that the regulator discontinued MAPIN (market participants identification number) around six months back after introducing it last year. However, Damodaran made it clear that MAPIN project was suspended not abandoned. "This time we will have 3-4 agencies instead of one agency for the identification number," he added. Sebi mulls unified SRO

Sebi is contemplating a super self-regulatory organisation (SRO), which will look into the ground level control aspects of capital market, mutual funds and merchant bankers.

At an interactive session, Sebi Chairman M Damodaran said the market regulator was working on the idea of a unified SRO rather than separate SROs for mutual funds, capital market and merchant bankers.

"We have already spoken to organisations like Association of Mutual Funds in India (AMFI) and Association of NSE Members of India (ANMI) for SRO. But we feel that rather than multiple SROs a unified SRO will be a better option," he said.

According to Damodaran, the independent SRO may be a combined body of AMFI, ANMI, representatives of merchant bankers and a few financial market experts.