Bankers stopped from sharing bidding data with investors

Sebi has said investment banks should direct investors to original sources such as stock exchanges, where data is publicly available.

Markets regulator Securities and Exchange Board of India (Sebi) has directed investment bankers and other entities involved in primary market issuances to refrain from sharing bidding data directly to investors.

It is a fairly common practice for investment banks to share application/bidding data for IPOs, OFS, rights issue, and delisting offers with investors on an hourly basis.

The regulator has said investment banks should direct investors to original sources such as stock exchanges, where data is publicly available.

Sebi said the public information helps prevent information asymmetry, while information shared by investment banks could be selective and may create prejudice in the minds of some investors.

“In order to avoid any kind of misinformation or lag between sending the information by the broker or merchant banker and receipt of such information by the investor, the seller broker or merchant banker may direct the investors, clients to publically available sources,” the regulator has said in an informal guidance, which is an interpretation of the law.

Referring to regulations, Sebi said no advertisement should be released during the course of a particular issue, which indicates whether an issue is subscribed or oversubscribed or even the investor response to the issue.

Photograph: Shailesh Andrade/Reuters