Primary market reforms: What's on SEBI's agenda?

Today, the Securities and Exchange Board of India (SEBI) board is likely to discuss comprehensive reforms to revamp the primary markets. As many as 18 regulatory amendments are likely to be deliberated.

This comes five months after Pranab Mukherjee in his Budget speech promised a booster shot to the primary markets and steps to increase retail participation. And just ahead of that meeting, the SEBI chairman UK Sinha was seen yesterday (August 15, 2012) at the finance ministry, reports CNBC-TV18's Nayantara Rai. It is a crucial SEBI board meeting. Big bang reforms for the primary market are on the cards, the list is long. Electronic IPO: Sources say electronic IPO will be discussed at the board meeting. SEBI may look at introducing this facility via its 1,030 applications through a nationwide network or brokers of stock exchanges. ASBA (Application Supported by Blocked Amounts) will be made mandatory, but ofcourse the most important thing is say goodbye to that cumbersome paper work, submitting cheques etc. Everything will be electronic. SEBI may even look at making payments via ATMs, Debit Cards as well as mobile phones. Eligibility criteria may be revised:  To make the investors feel confident about the credibility of the issuer, some eligibility criteria may also be revised. For example, profit making companies, they will have to be profitable for three of the five preceding years and the pre-tax operating profit will have to be Rs 15 crore. Eligibility of FPOs and fast tracking rights issues: The average free fall to market capitalisation may be reduced from Rs 5,000 crore to Rs 3,000 crore. About 80 issuers are expected to benefit from this. Disclosure norms: Right now, a company has to disclose the price band for an IPO just two days before. SEBI may look at making it mandatory for a company to advertise the price band atleast five days before the issue opens. Mandatory safety net: A mandatory safety net is also very much on the cards. Sources say, the SEBI board has the proposal where it would look at triggering a safety net in case the share price was below 20% of the listing price in a period of three months, three months weighted average price. Applicants, who have invested atleast Rs 50,000, will be eligible for the safety net. Mutual fund industry: Reintroduction of 2% entry load fee is on the cards. Sources say a 2% marketing charge for cities outside the top-15 cities.