Hyderabad: The Indian capital markets regulator Securities and Exchange Board of India, or Sebi, is hopeful that in an year’s time it can ensure the listing of shares in initial public offers (IPOs) within five working days from the closure of an issue. The regulator also expects to kick up trading in interest rate futures and launch a separate trading platform for mutual funds in the next couple of months. Meanwhile, a Sebi-IRDA working group is also was working on disclosure norms for insurance companies planning to go public.
Edited excerpts of Sebi chairman CB Bhave’s media interaction at the Institute of Insurance and Risk Management in Hyderabad on Thursday.
You have been planning to reduce the time of listing of IPOs to less than a week. Any progress on that front?
The main difficulty in reducing the period between the end of an issue and the day of the listing is the fact they need to handle a lot of physical applications along with the cheques, which have to be cleared. It is our hope that as the ASBA (applications supported by blocked amount) process becomes more popular, the processing time will get reduced and then we will be able to reduce the timelines. (Under ASBA when an investor applies for an IPO, money does not leave her account. Instead, it is blocked and only after the allotment is made, money leaves the account.) We have some encouraging response in NHPC Ltd’s IPO, where about one and a half lakh applications have come through the ASBA process. So, it is picking up. Of course, the banks need to gear up and we need to inform investors more about the ASBA process. And hopefully as the ASBA process becomes more dominant we will be able to reduce the processing time. And, therefore, issues will get listed faster than before.
When do you expect this to take place?
I don’t have a timeframe because ASBA is a kind of a systemic change and we need to see how it progresses. But our ultimate aim is to reduce the time period to five working days. We would like for it to happen as soon as possible. But we have to deal with the fact that the whole system has to change. Hopefully, in about a year’s time we should be able to get that.
What has been the progress so far?
The fact that a 1.5 lakh applications came in (in NHPC issue) is good and the market is testing out the new process.
Any thing new that you plan to introduce in the market?
We are looking at interest rate futures market being started. An RBI (Reserve Bank of India) and Sebi committee has worked on it. We have called for applications from the stock exchanges. My information is that the stock exchanges are in a fairly advanced stage of preparations and we should see some result in the next couple of months.
You are also planning to have a separate trading platform for mutual funds.
We recently had a meeting with the mutual funds. The Association of Mutual Funds of India has told us that they have more or less frozen the kind of design and they will now look to competitive vendors for deciding on what kind of platform needs to be in place. In the next couple of months it should be launched.
None of the insurance firms is listed so far and many of them are making losses. Would Sebi consider waiving the three-year profit track record stipulation for the insurance companies planning to go public?
For insurance firms the disclosure requirement will be different. An IRDA (Insurance Regulatory Development Authority) and Sebi working group has be working on the relevant issues such as what kind of disclosures are required when an insurance company comes with an IPO. Once the working group decided on what needs to be done and our respective boards approve that, we will make it public.
Any update on extension of trading timings on Indian bourses?
We have taken up the issue in our secondary markets advisory committee and by and large the opinion was that there is no harm in extending the timings but we need to look at the practical issues. We have requested the stock exchanges to form a committee along with the practitioners to understand what their issues are.
What has been the progress of Sebi probe into the Satyam Computer Services Ltd’s accounting fraud that rocked the corporate world early this year?
The Government of India and Sebi together made sure that the company goes over to another management in an open and transparent manner. That part is over. That takes care of employees as well as the clients of Satyam. The issue of fraud is something into which investigations are being carried out by CBI Central Bureau of Investigation), SFIO (Serious Fraud Investigation Office of the corporate affairs Ministry) and Sebi and we are maintaining close coordination. Sebi has also issued some show cause notices. And once show cause notices are issued, that becomes a quasi-judicial process. So we do not comment on it. Only when the final order is issued, we will make it public.
What is the progress on listing of stock exchanges?
It is our consideration at this stage that the stock exchanges need to worry about many other things and not about listing. They need to see what their role is going to be in future and whether they are technologically equipped to perform their role.