To unlock the money invested in a public offer faster and reduce risk to investor, CB Bhave, Chairman of Securities and Exchange Board of India (SEBI) opined that companies should list within seven days of IPO. At present the period is 20 days.
Calling the gestation period an unacceptable risk that investors and issuers carry, Bhave said that SEBI plans to reduce this period to seven days over the next one year. “Shorter gestation period would unlock money invested in IPOs faster, so that it can be productively employed,” he said.
Regulator said that the primary issuance process in India is not as efficient as the secondary market and that timely settlement of transactions continue to be a challenge in the system.
Seeking to lower costs and risks associated with mutual fund investments, which in turn affect investors, Bhave said, “We need to look at reducing the cost of mutual funds and risk of investors.” He suggested the industry to set up a common transaction platform.
A common platform is being designed by Association of Mutual Funds in India (AMFI) and is likely to be operational by March 2010. The idea is to provide all fund houses and distributors a single platform where investors can have the true sense of choice and a mutual fund investor can access this common platform and choose the scheme that he wants to invest in.
“Buying and selling of mutual funds in exchanges would open up a marketing channel for the mutual funds and it will bring down the cost of transactions, and this is all to the benefit of the investor,” Bhave said.
The SEBI chief urged mutual funds to participate and use their voting power actively in companies, of which they hold shares, to help strengthen corporate governance in India Inc.
On the corporate governance front, he said, “NSE is trying to evolve a set of criteria that would differentiate companies based on corporate governance performance and this should help improve corporate governance standards.”