Good news for retail investors

It's time to cheer for retail investors who would get a bigger pie of share allotments in public offers as intermediaries and fraudsters involved in IPO scams are running for cover after market regulator Sebi banned some of the big players.

"The impact of Sebi action will be positive for retail investors as they will get greater allocation in IPOs," Prithvi Haldea of Prime Database told PTI.

Haldea said retail investors were duped for the last three years as certain people masquerading as retail investors took away the share allotments through benami demat accounts. However, Haldea admitted that action taken on some of the big intermediaries will have some negative impact.

Karvy, which was banned by Sebi from all kind of operations relating to security market, may affect share transfer and registrar services as it the biggest registrar in the country.

Karvy was the registrar of all the big ticket IPOs in the recent past and has the requisite infrastructure.

"There are hardly any big registrar like Karvy, so the ban may affect big IPO handlings as processing of lakhs of application for shares is not easy," Haldea said.

He said this is, however, an opportunity for smaller registrars to grab the market from Karvy by developing bigger processing facilities and computerisation of operations.

Smaller registrars have to improve infrastructure to create capacity to handle volumes in lakhs in order to avoid a crash like the one MCS Ltd suffered some time back.

Haldea said ban on some Depository Participants will not have any major bearing on retail investors as they can switch to another DP in 15 days.