This refers to the news report “Grey market bets big on Coal India issue” (October 5). This is surprising since a fortnight ago the media reported that the Sebi chief had “slammed” investment bankers for over-pricing IPOs. We now have a case of under-pricing since the grey market would otherwise not be active. That the promoter is also the regulator’s own boss adds spice to the story. I certainly believe that the regulator knows how to achieve true price discovery. But this is not happening, which indicates that the regulator can’t do it or is not being allowed to do it by the mafia of promoters, managers, their in-house broker syndicate and fixers.
The news item reports, “Investment bankers and stockbrokers that control this unregulated market are already trading CIL shares at a Rs 10-12 premium — even before the price band or issue date is officially announced.” This is not surprising since asymmetry of information oils our markets and the information is often made known to favoured insiders. Look at regulations that diluted lock-ins, brought in 100 per cent margins and discretionary allotment under the disguise of “anchor investor”. Did these ever go through any committee or were they ever put up for comments? Since government-owned companies represent national wealth and the regulator swears on transparency and disclosures, should we not know who are the favourite “anchor investors” who have been allotted our wealth? Can the regulator do anything since the government has made the current chairman a lame duck?
T R Ramaswami, Mumbai