Sebi mulls making retail IPO investment easy

TIMES NEWS NETWORK [ SATURDAY, JANUARY 22, 2005 ] NEW DELHI: With the primary market expecting public offers worth over Rs 40,000 crore this year, market regulator Sebi is considering a slew of measures to ensure that retail investors find it easier to invest in IPOs. The infrastructure committee under Sebi is going into the nitty-gritty so that the regulator can amend some of its norms to facilitate investors and at the same time avoid the allotment crisis faced during the public offer of ONGC last year, sources said. “Investors have to fill up application forms for IPO at least thrice. This leads to confusion on reconciliation. However, multi-data capture can be avoided by using the information present in depositories like NSDL and CDSL,” an NSDL official said here. At present, investors have to state his or her name, bank account, PAN number and other things in at least three forms. However, all this information is present with depositories. The only information that is needed from the investor is his or her Client Identification Number and Depository Identification Number in the IPO forms. Using the Client ID and DP ID numbers, the bank can transfer the funds to the company, which has come up with the public offer. The shares can be transferred and allotted to the investors through the depositories. Another proposal that is under Sebi’s consideration is shortening the period of allotment of shares to three days. This would ensure that investors’ money is not locked up for a longer time.

This will definitely attract more retailers to the Primary market. One of the major stymies that a retailer faces in the Primary market is that his/her money gets locked up for a month or so. This lock-out may turn out to be a white elephant many a times since most of the IPOs get over-subscribed and a lot of us don't get a share of the pie. Hope these ideas materialize in the near future.