The news report “Sebi to probe high volatility in IPOs” (October 19) gives the impression that this is a recent development, when in fact it has been going on ever since book-building started. Look at all your reports every year after a spate of initial public offerings (IPOs). It happens because regulations facilitate this. The Securities and Exchange Board of India (Sebi) is like someone who pinches the baby and then rocks the cradle.
What is required are a few simple changes in book-building: no price band, allotment to start from the highest bidder and a closed book during the qualified institutional buyer bidding. Why not a French auction? The book must be closed even to the lead managers to prevent selective leaks and asymmetrical sharing of information. These measures are being resisted by the nexus that often gets things done through Delhi.
Your report states that the market regulator would look into the subscription details and trading pattern of the stocks of some of the recently-listed companies. It did the same in 2004-05 and found nothing amiss. It will find nothing even now. Even if it finds anything, the big fish will get away and some small fry’s name will be bandied about as the blue whale.
T R Ramaswami, Mumbai
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