The Securities and Exchange Board of India (SEBI) plans to review the IPO process to benchmark it to the global best practices. Issues such as possibility of the participation of brokers and the role of merchant bankers will be analysed during the review.
“We are benchmarking ourselves to global practices. We need to look into certain issues such as the quota for various categories of people, whether brokers can participate in the process and the role of merchant bankers among others,” SEBI Chairman, Mr U.K. Sinha, said on the sidelines of an interactive session organised by the Bharat Chamber of Commerce here on Friday.
The capital market regulator has, in the recent past, simplified the IPO process by reducing the size of IPO application forms to half and making information precise and indexed.
High STT
The SEBI Chairman felt that the government should review the securities transaction tax (STT) as the current transaction costs in the country were too high. “The statutory dues currently account for a very high percentage of the costs of transactions in the Indian market,” he pointed out.
KYC norms
SEBI plans to come out with guidelines for setting up centralised KYC (know your client) registration authority by the end of this month. Currently, an investor has to complete separate KYC processes for investing in mutual funds and stock market although both are regulated by SEBI. This needs to be simplified, he said.
The capital market regulator will enforce stricter regulation to govern alternative fund instruments such as venture capital and private equity. SEBI had put out the concept paper to regulate such instruments for public comments in August this year.
“There is a need to improve accounting standards and enforce best practices in private equity and venture capital funds. The idea is not to restrict their activity, but to ensure that any large pool of money collected from large pool of investors should not escape regulatory scrutiny,” he said.
P-notes
The new disclosure norms on participatory notes (P-notes) — the guidelines of which will be in force by the end of this month — would help keep a tab on hot money flowing into stocks, he felt.
“Post October, any P-note issued by brokers should mandatorily have KYC details. We do not want to discourage, but a set of rules will be framed for investor protection,” he said.