No change in retail quota
Retail investors will continue to have quotas in IPOs. Sebi chairman M Damodaran on Sunday ruled out scrapping quotas for retail investors, saying such a system has to continue to encourage more small investors to put their money in equities.
By TNN |
PUNE: Retail investors will continue to have quotas in IPOs. Sebi chairman M Damodaran on Sunday ruled out scrapping quotas for retail investors, saying such a system has to continue to encourage more small investors to put their money in equities.
Currently, 50% of the allotment in an IPO is reserved for institutional investors, 15% for high networth individuals. The remaining 35% is reserved for retail investors. “We will not abandon quotas for retail investors,” Damodaran said at Summit SIBM — the annual management conclave of the Symbiosis Institute of Business Management.
His remarks assume significance as the National Securities Depositories (NSDL) had reportedly made out a case recently for the abolition of quotas for retail investors in IPOs. The trigger, of course, has been the IPO allotment scam.
The abuse of the IPO allotment process featured a handful of investors getting entitlement to shares reserved for retail investors. This was done by putting in thousands of fictitious or benami applications. The capital market regulator had sought suggestions on strengthening market surveillance after the IPO scam.
According to the Sebi chairman, investor expectations have undergone a sea change over the past decade. He, however, held that there was product confusion in the market at the moment. A product like ULIP, for instance, is sold by mutual funds as well as insurance companies — which have different regulators.
Damodaran also sounded a word of caution for investors parking their savings in bank deposits in the belief that it is risk-free. He made a pitch for investors to turn to the equity markets.
Currently, 50% of the allotment in an IPO is reserved for institutional investors, 15% for high networth individuals. The remaining 35% is reserved for retail investors. “We will not abandon quotas for retail investors,” Damodaran said at Summit SIBM — the annual management conclave of the Symbiosis Institute of Business Management.
His remarks assume significance as the National Securities Depositories (NSDL) had reportedly made out a case recently for the abolition of quotas for retail investors in IPOs. The trigger, of course, has been the IPO allotment scam.
The abuse of the IPO allotment process featured a handful of investors getting entitlement to shares reserved for retail investors. This was done by putting in thousands of fictitious or benami applications. The capital market regulator had sought suggestions on strengthening market surveillance after the IPO scam.
According to the Sebi chairman, investor expectations have undergone a sea change over the past decade. He, however, held that there was product confusion in the market at the moment. A product like ULIP, for instance, is sold by mutual funds as well as insurance companies — which have different regulators.
Damodaran also sounded a word of caution for investors parking their savings in bank deposits in the belief that it is risk-free. He made a pitch for investors to turn to the equity markets.
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