Optional IPO price but full disclosure: Sebi

MUMBAI Chairman Madhabi Puri Buch said: The Securities and Exchange Commission of India (Sebi) does not have any role in the pricing of initial public offerings (IPOs), even if she emphasized the need for a detailed disclosure-based mechanism for the efficient functioning of capital markets.

“People are free to do what they want but they should disclose information,” Buch said, speaking at a capital markets event organized by the Federation of Indian Chambers of Commerce and Industry (Ficci).

The comments from the head of Sebi come amid growing debate about the role of market regulators in pricing IPOs. This follows a sharp drop in shares of several new-age tech companies since they went public in 2021, taking a heavy toll on investors and stoking concerns about the future. the high valuations of these companies before selling their shares.

“A lot has been said about the valuation of IPOs by new age tech companies. Our view is simple at the price you choose to do an IPO as your business; We have no business to suggest otherwise. The days of CCI (Controller of Capital Issuance) are long gone. Parliament has asked Sebi that we should not take a position on the valuation of matters. You are free to price the matter at whatever price you deem appropriate,” Buch said. However, the specific procedure is guided by Sebi, including how to file IPOs or how they are made available in the public domain,” she added.

“If a company is going to IPO, three or six months ago, and has placed its equity with several parties, say a private party in 100 but looking forward to hitting the market in 450 … we ask you to tell investors what makes the difference between 100 and 450. What has changed? It can be internal or external metrics. Basically Sebi expects revelations regarding these aspects,” added Buch.

Sebi is also relying on data and technology to operate efficiently. “Every policy issued today is back-tested with data. Now not a single piece of paper moves in Sebi that is not supported by data. We will avoid dogma and we will capture data,” she said.

She also points out that because market dynamics are changing at a rapid pace, and that “technology is the ‘magic bullet’ that will help reduce costs, better serve customers, gain control and compliance. It will also help Sebi tackle financial misconduct such as insider trading, pre-manipulation and market manipulation that have become common in the business ecosystem.

Meanwhile, the regulatory agency is evaluating the form and manner of disclosing information to the public about derivatives trading.

Mr. Buch said: “India is not a nanny country…. F&O segment. “There is information that Sebi is reviewing and evaluating in terms of form and how (disclosure) should be disclosed to the public,” she added.

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