The Securities and Exchange Board of India’s (Sebi’s) new steps to counter price volatility on the day of listing are welcome. These steps, however, might not address the bigger problem of inappropriate pricing of initial public offers (IPOs). Investment banks play an important role in advising the issuer on the price band, apart from preparing documents and disclosures. We can incentivise investment banks to do a more careful job of this by paying a percentage of their fees with shares issued at the IPO price. These shares can be made non-alienable for one year after listing.
P Datta Kolkata
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