The Securities and Exchange Board of India has set up an expert group to look into the entire IPO process, and work has already begun, according to Mr U.K. Sinha, Chairman, SEBI.
“We are looking at a review of the entire IPO process — who would participate, what manner they would participate and the timelines,” he said, on the sidelines of the India Finance Conference 2011, held here on Friday.
He added that the volatility witnessed on the listing day has also drawn the attention of the market regulator.
investigative powers
“Very soon, you will hear that some action has been initiated on the policy side. On the investigation and policy side, we are looking at things very seriously.
“We have not yet firmed up our views; we hope to do it very soon,” said Mr Sinha. He, however, declined to give a timeline for the same.
Mr Sinha also pointed out that SEBI is looking into its entire regulations, including insider trading, adding that small changes have been made already. “But the complete review of insider regulation will also depend on the investigative powers that SEBI has,” said Mr Sinha.
Detecting insider trading and successfully proving it are difficult, as there are challenges in providing evidence that would sustain in the court of law, he said.
There is a legal lacuna, said Mr Sinha. “SEBI is not able to access electronic surveillance that many of the agencies have been able to,” he added. Some powers are required on the investigative side of SEBI, he pointed out.
That would “require certain changes in the legal system or the laws in the country,” he added.
According to him, the Government has set up a financial sector legal reforms commission, and SEBI is already interacting with the commission, he said.
P-Notes
Speaking on growing concerns on money-laundering activities, he said that the percentage of money coming in through participatory notes has come down substantially from 50 per cent in 2007 to 15-16 per cent now.
“There is a very strong KYC done at the time of issuing participatory note or when a sub-account comes in. What we have done in the past 6-9 months is that FIIs are obliged to provide us information on the end beneficiary,” said Mr Sinha.