Ajay Tyagi: IPO price discovery is not as “transparent” as stock markets
Securities and Exchange Board of India (Sebi) Chairman Ajay Tyagi said on Thursday that market price discovery of the initial public offering (IPO) was not as “transparent and efficient” as price discovery secondary market and urged retail investors to “focus” more on the secondary market. because there is greater disclosure for listed companies.
In 2021 so far, 41 companies have launched IPOs and have raised around Rs 64,244 crore in the market. In 2020, at least 16 companies raised Rs 37,350 crore through IPOs. Majority funds raised by these IPOs over the past 2 years were in the sell offer segment, which allowed venture capitalists and early stage investors a partial or full exit.
Tyagi, who spoke to the media at the Financial Markets Summit hosted by CII, said the regulator was moving towards a shorter settlement cycle in a phased manner due to representations made by foreign portfolio investors (REITs) . Sebi introduced an optional T + 1 trade settlement cycle for domestic investors from January 1. According to Tyagi, this was done for the benefit of investors.
“The transition from T + 3 to T + 2 took place in 2003. It is necessary to reduce it further now because there have been significant reforms in payments and the banking system. Investors have the right to receive what they buy as quickly as possible. The T + 1 settlement cycle is in the interest of all market players, ”he said. Tyagi also said that the new maximum margin standards imposed by Sebi are in everyone’s interest.
As of this month, Sebi has banned brokerage houses from allowing any additional intraday leverage for trading in stocks and derivatives. On the issue of shareholder activism, he said it “is good for everyone, especially minority shareholders”.