The stock exchanges have proposed that the minimum offer size of a company's equity be increased from the current level of 25 per cent to 40 per cent of the paid-up capital, for listing in a bourse.
The Federation of Indian Stock Exchanges (FISE) have urged the Securities Exchange Board of India (Sebi) to hike the minimum offer size which, according to its members, will create greater liquidity in the market. However, this move goes against the recent proposal of Sebi that companies should be allowed to list shares with 10 per cent public holding.
The federation has further recommended to Sebi that the book-building portion should be confined to 50 per cent of an issue up to Rs 10 crore and 25 per cent for issues above Rs 10 crore, subject to a minimum of Rs 5 crore. Further, all the stock exchange centres in the country should be mandatorily made collection centres in respect of all issues, irrespective of the size. FISE members will present a detailed memorandum to the finance minister for incorporating these suggestions in the forthcoming budget. The meeting also decided to constitute two expert standing committee, one on the primary market and another on secondary market, which will give the reaction of the industry to various developments on a continuous basis.
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Chairman of the Interconnected Stock Exchange of India, M R Maya said, "This move will increase the participation of common investors in the public offer as a wide distribution of shareholders will lead to a better price recovery, impart greater liquidity and cut manipulation in the book-building process."
In an effort to create a level-playing field, FISE members have recommend to Sebi to restore payment of contango charges to the short sellers. Meanwhile, the federation has decided to publish a regular newsletter giving detailed information about the operations. It has also proposed to create a website for the federation to disseminate information about the capital market and to educate the investors.