Special Correspondent

Proposes to introduce Consent Orders

  • International meet from April 9 to 11
  • IPO grading not to address pricing issue

    MUMBAI: The Securities and Exchange Board of India (SEBI) Chairman M. Damodaran on Wednesday said the forthcoming meeting of the International Organisation of Securities Commissions (IOSCO) would discuss various issues, including the hedge funds and ways to regulate them and various measures to help small and medium enterprises (SMEs) to access the capital market. The IOSCO conference would be held in India for the first time in Mumbai from April 9 to 11.

    Around 30 per cent of FII investment in the capital markets was through Participatory Notes (PNs), Mr. Damodaran said. SEBI is now considering allowing these funds to come to the market directly instead of through the PN route wherein the sources of funds are not known. SEBI intends to avoid the anonymous nature of a hedge fund investing in India.

    Mr. Damodaran said the regulator would soon bring in a regulation for investment advisors. SEBI had also decided to introduce `Consent Orders' for all matters which are pending regulatory action before the Securities Appellate Tribunal and Courts. [A Consent Order normally means a settlement between two parties which prevents further litigation in a pending matter.] SEBI on Wednesday put up on its website an announcement that the subject will be dealt with in the FAQ (frequently asked questions) section on Thursday.

    IPO grading

    The IPO grading will not address the pricing issue, according to Mr. Damodaran. He said this (grading) need not be implemented in the case of a rights issue as investors were already stakeholders of the issuing company. However, grading of an IPO would help an investor to decide on investing in a company, which is coming to mop up funds from the market.