IPO order will go forward, says SEBI Chairman

Special Correspondent Reveals plans to regulate distribution of MFs, introduce IDRs QIP regime will help check outflow of capitalWarns merchant bankers on IPO vetting KOLKATA Orders from the and hra Pradesh High Court will not stand in the way of taking the matters regarding the initial public offering (IPO) irregularities case forward, chairman of the Securities and Exchange Board of India (SEBI), M. Damodaran, said. Talking to the press here on Tuesday after addressing a seminar on `Recent developments in capital markets', he said "We will take this forward". He was answering a query on the fate of SEBI's interim orders in the wake of the stay granted on them. Mr. Damodaran also revealed plans on regulating distribution of mutual funds and introducing Indian Deposit Receipts (IDRs), even as he issued a warning to merchant bankers on IPO vetting. He said the 250-page SEBI order on the IPO matter had said that parties could come within 15 days of the interim order to get a hearing. Pointing out that these dates were now getting fixed, he said this would be a part of the process of post-decisional hearing that would be held in the spirit of natural justice. He observed that in this case, pre-decisional hearings could not be held as it was not in the public interest to do so, given the time it would have taken. Mr. Damodaran said MF distribution had stayed outside regulation so far and through consultation with the Association of Mutual Funds Industry of India (AMFI) the industry would be asked to throw up ideas on regulation. "We are also looking at the processes in place overseas", he said. He said IDRs were proposed to be introduced and SEBI would revisit the rules that it had framed in this regard some time back. There were also plans to launch convertibles as SEBI was keen to launch new products that would make the Indian capital market "a market of choice for issuers of choice". Earlier, addressing the seminar, the SEBI chief said although the Indian capital market was still emerging, it enjoyed a good position among the top global markets. He dispelled the myth that the market was dominated by foreign institutional investors (FIIs), saying that three-fourths of the market was ruled by Indian retail investors. "They are the backbone," he said. Admitting that the bond-market had been a non-starter, he said the year 2006 should see steps being taken for its healthy growth for which a road map had been drawn. On the qualified institutional buyer (QIB) regime put in place by SEBI on Monday, he said this would prevent continuing export of capital from the Indian markets. He said while it was SEBI's intention to bring more stock into the market, the onus of vetting IPOs properly was on the merchant bankers and they had been warned that if they failed even in a single instance, then "SEBI will not be on talking terms with them". He also mentioned a plan to introduce optional grading for IPOs which would be aimed at helping first time investors get an `at-a-glance view' of the pros and cons of investing in a particular IPO. PTI reports from Mumbai Karvy makes submissions Karvy Stock Broking (KSB) on Tuesday made its submissions before the Securities and Exchange Board of India in relation to the IPO-demat scam.