The Sebi board today took the important decision to reduce the number of days between the opening of an initial public offering (IPO) and the listing of shares. Current regulations allow as many as 21 days within which an IPO must be listed. This is likely to go down. In his first public appearance after assuming office, Sebi chairman C B Bhave said, “If we collapse the timing between an IPO opening and its listing, the need for a grey market will diminish. There will be no incentive for grey market operators.”According to ICICI Bank executive director Anup Bagchi, “The lower the number of days, the lower the settlement risk, lower the volatility and higher the cash rotation.” Citing the efficiency in secondary markets because of changeover from T+5 settlement (you get delivery of shares or cash when buying or selling shares within five days) to T+2, he said, “The number of days can be shortened in the primary market too. Sebi will have to streamline the process.” Other market players welcomed the move. “It is a progressive step and is in the right direction that will take our markets in line with the global markets operations,” said Kotak Investment Banking chief operating officer S Ramesh.At the Sebi board meeting today, finance minister P Chidambaram also emphasised the need for a greater investor protection, education and market development. “The FM said that our focus should be on investors who are in the market for the long term,” Bhave said. This is in line with the finance minister’s proposal in Budget 2008-09, under which he raised the short-term capital gains tax from 10 to 15 per cent to discourage short-term investors. The board took three other important decisions. It formed a three-member committee headed by Mohan Gopal to oversee the conduct of all proceedings initiated by Sebi against National Securities Depository Ltd (NSDL). In his previous assignment, Bhave was chairman of NSDL.In another important development that will benefit mutual fund houses and companies coming up with public issues, Sebi reduced the ad valorem fee for filing of an offer document, both for fund houses and companies, to one-sixth, from the existing 0.03 per cent to 0.005 per cent subject to a maximum of Rs 50 lakh in case of mutual funds and Rs 3 crore in case of public issues. The fee structure will come into effect from April 1, 2008.The board also approved the proposal to permit Madras Stock Exchange members to trade on the National Stock Exchange (NSE) platform, subject to certain terms and conditions.
