What’s crippling share market? SEBI boss calls out markets’ polio, smallpox; no view on IPO pricing

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SEBI chairperson Madhabi Puri Buch termed insider trading, front running, and information asymmetry as Indian equity market’s smallpox and polio. She assured that SEBI’s every single policy is back-tested by data. “There is not a single piece of paper now that moves within SEBI that is not backed by data,” Buch said at an event on Tuesday, 13 September. She added that the capital market regulator was trying to keep pace with the evolution of the market. SEBI holds no view on the IPOs pricing, and companies are free to price their issue, which they feel is appropriate for them, Buch iterated. She added that there is a need to manifest the spirit of partnership between SEBI and corporates.

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Buch noted that the regulator is in a disclosure-based regime, and full disclosures protect all stakeholders. “Every step at SEBI will be taken after recommendations from the advisory committee,” Buch said. The Securities and Exchange Board of India is working to improve trust in capital markets, and see a lot of opportunities for India in the current environment. “SEBI believes that it exists for capital formation for the Indian economy,” the SEBI Chairperson said. She added that trust in the system needs to be protected, otherwise SEBI will fail in its core objective. She also noted that transparency is one important aspect of trust building, which holds importance for SEBI. Nation building is being done on the ground by the corporates who are building businesses, producing products, delivering services to the consumer, and that is what is creating wealth for the nation, she further said.

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Technology is the magic bullet

Talking about public issues and preferential share allotment, Buch said that firms must disclose differences in pricing on the preferential allotment and subsequent public offer. In regards to litigation against managerial personnels, SEBI Chairperson advocated consulting, saying “SEBI has plenty to do if firms fail to disclose litigation against managerial personnel in offer documents. Our working assumption is that the world is too complex, thus we must consult.” Buch believes that technology is the ‘magic bullet’ as according to her with technology, it is possible to reduce cost, serve the customer better, have better control, and compliance.