The Securities and Exchange Board of India (Sebi) has decided to go for a comprehensive review of the primary market processes and norms governing the mutual fund industry.
These are the two major areas where retail investors' participation has been affected badly in the past few years.
The initial public offer process review will involve further reducing the time between closure of an issue and listing. At present, listing has to be made within 12 days.
To help investors make informed judgment, Sebi has already asked merchant bankers (issue managers) to reduce the size of the application form for IPOs and disclose their track record of the issues managed and their performance.
"We want to review the process further since our basic approach is to make life easier for retail investors," top sources in Sebi said. Sebi is also looking at cutting down the number of days it takes to clear IPO applications.
In the past few years, several path-breaking measures have been taken for deepening and regulating the primary capital market (IPO market). These include 100 per cent payment along with applications for institutional investors, including foreign investors, and the introduction of applications supported by the blocked amount (ASBA)
However, ever since these measures were implemented, the primary market has been facing rough weather because of external factors.
The sources say the situation gives an opportunity to simplify the processes further. The standing advisory committee for the primary market has been assigned the task of undertaking the review and a meeting to be held in the next couple of weeks will begin this process.
The process will take a few months before any consensus. Sebi's role will come after the committee submits its recommendations.
The regulator has already taken a few measures to incentivise the mutual fund industry since retail participation has been a concern. However, the reconstituted standing MF advisory committee's meeting will be called soon to discuss issues the industry is facing.
This is warranted as Sebi's move to ban the entry load two years back has shaken the industry.
Sebi sources say the measures taken so far are "just a beginning". It has been felt there is a need to improve buying and selling of mutual fund units on the floor of stock exchanges and expanding the base of investors in mutual funds. All these issues will be deliberated by the standing committee.
