The SEBI board will meet today to decide on a wide range of reforms for the primary markets. In an interview to CNBC-TV18, Prithvi Haldea, chairman and managing director, Prime Database, discusses all the proposals that are on the table.
The SEBI board will meet today to decide on a wide range of reforms for the primary markets.
On the agenda are proposals to change the eligibility criteria for IPOs and making IPOs electronic. There are proposals to safeguard the retail investor by putting a mandatory 20% safety net for IPOs.
In an interview to CNBC-TV18, Prithvi Haldea, chairman and managing director, Prime Database, discusses all the proposals that are on the table.
Below is the edited transcript of his interview on CNBC-TV18.
Q: What do you make of the proposal of making IPOs electronic?
A: One of the things, which has been bothering everybody, is the reach of the present distribution. IPOs currently are marketed through merchant bankers, a syndicate that is created. The syndicate members are typically brokers who work on a particular IPO. Therefore, applications can be made only through these syndicate members.
In case you are an ASBA (Application Supported by Blocked Amounts) investor, you can go to ASBA Bank branch and deposit your application. The idea with e-IPO is to enable every single terminal of every single registered broker of Bombay stock exchange and NSE to be able to accept application.
I think this is a revolutionary change. It would make IPOs accessible to almost every city and town, even small towns, across the country where a terminal exists. So, I think e-IPO as an idea should have come much earlier, but I think the time is absolutely right. Investors can actually just walk next door and apply for an IPO rather than having to make efforts to do that. So, I think it is a fantastic proposition.
Q: In terms of implementation and execution for the regulator to actually be able to effectively rollout this, how difficult is it going to be?
A: One, ASBA being made compulsory would also necessarily mean the reach of the IPO process would become far and wide. Therefore, it will become much simpler for investors to apply in IPOs using the ASBA process.
In case you do not want to, there is a simultaneous provision that says that every broker’s terminal would be allowed to accept IPO applications. So, it is effectively opening up the IPO market in terms of distribution so widely that atleast that does not become a bottleneck in terms of the issue process.
Two, compulsory ASBA also does a wonderful thing by the side. That is very important. It does not take into account any checks or instruments for clearing. That means that the whole IPO process, after closure to listing, can actually get reduced by six-eight days. So, you could actually start having listing in three-four days after the issue closure. This is very good news both for the issuer as well as for the investor because you are not taking a call on the market for that much longer period of time.
For complete interview watch the video.