SEBI will not interfere in the IPO pricing process, says SEBI chief Madhabi Puri Buch, but prefers better disclosures

• SEBI chief Madhabi Puri Buch urged IPO-bound companies to properly disclose equity value since inception.
• Front running, insider trading, information asymmetry, fraudulent transactions, stock price manipulation are our versions of smallpox and polio, she said in her maiden speech.
• SEBI has nothing to do with what price a company chooses to go public, but rather urges disclosure of all information before going public.

In her first-ever public address, Madhabi Puri Buch, Chair of the Securities and Exchange Board of India (SEBI), urged the industry to comply with regulations and called for more transparency and better disclosures from companies tied to IPOs.

“Without industry support, it is difficult for SEBI to get rid of all the evils we know about – front running, insider trading, information asymmetry, fraudulent transactions, stock price manipulation,” Buch said at FICCI’s Annual Capital Markets Conference. Event.

“I don’t think we can claim to have rid the market of its own peculiar versions of smallpox and polio,” she added.

This was Buch’s first public address since his appointment more than six months ago, on February 28.

In her address, she highlighted SEBI’s stance on IPO pricing, companies’ lack of disclosure ethics and frequent fraudulent activity.

Buch also said that SEBI aims to keep pace with developments in the industry as companies grow.

“On the one hand, the world moves so fast, all companies change so fast, markets move so slowly, I suppose you expect the regulator to keep up with you, then how can we say we’re the Regulations will come out once a year and should keep up with this format,” says Buch.

On the growing F&O trading among retail investors, Buch said that SEBI doesn’t want to restrict investors from trading because people are free and have the right to have access to any asset class.

“As this is your public conference since you took over the SEBI chair, and mine as well, let me assure you that NSE fully supports SEBI’s agenda of improving capital formation through the use of public markets and increasing the number of people in will fully and fully adhere to and implement the SEBI ecosystem, users and technology to achieve this and create a better and more dynamic fixed income and hybrid market,” said Ashish Chauhan of MD and CEO of the National Stock Exchange.

“SEBI has nothing to do with what price a company chooses to go public”

Buch also touched on the issue of pricing for technology company IPOs. She said SEBI has nothing to do with what price a company chooses to go public with; however, urged them to disclose all information before going public. “If the company going public three or six months ago has placed its equity with a party (say a private party) at £100. And now it wants to hit the market for £450. No problem, we have nothing to say about that. However, expect to disclose to the investor what makes up the difference between £100 and £450. Explain what has changed since the equity was placed,” explains Buch.

Her response cleared the air for many press reports that the market regulator will order the disclosure of a logic behind the pricing of an IPO. However, investors have complained to the SEBI about disclosures by technology companies.

“Long gone are the days of the Competition Commission of India (CCI), Parliament instructing us that we should have no insight into the pricing of emissions. You are free to value the issuance at any price you deem appropriate,” Buch said.

PayTM’s price range for its IPO was much higher than the private placement price, and many investors have since questioned that. The disclosures of Zomato’s acquisition of Blinkit also came under scrutiny after a group of wealthy individuals reportedly complained about it.

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