Sebi panel to tackle primary mart issues

The Securities and Exchange Board of India (Sebi) will shortly be constituting a committee to fortify the infrastructure and address existing issues in the primary market domain.

At a discussion between investments bankers and Sebi today, the idea of setting up a committee to further tighten the initial public offering (IPO) mart was mooted, which was accepted by the regulator.

Sources said that the committee would be set up soon with a specific mandate to clean up the IPO system.

Sources said that the meeting also focussed on the current status of the primary market. The rush of initial public offerings in March threw up several weaknesses in the IPO system, including the ability of stock exchanges to handle the volume of data coming in, weaknesses at the registrars' end and problems in the share allotment process.

Sebi also proposes to look at the listing price, which is often far higher than the offer price.

While the listing price is dictated by market forces, Sebi is interested in seeing if there are any deliberate attempts to prop up the price to provide exit opportunities.

Merchant banking sources said, "We have the responsibility of developing the primary market and ensuring that it functions efficiently."

The merchant bankers have been given the mandate to make the system more robust so that it will be world-class in the next two years. This is pertinent because the government has already said that it would be possible for it to raise Rs 1 lakh crore from the market every year for the next five years.

Sources indicated that there was very little discussion per se on the ONGC allotment fracas, which is still a burning issue with several investors still waiting to get their shares in their demat accounts.

The registrars to the issue were found to be woefully inadequate when it came to handling the voluminous work involved in the allotment of shares.

Similar confusion prevailed in the case of the Power Trading Corporation float. The listing of shares had to be delayed here too because of the delay in uploading files.