SEBI Board meeting - I

There was unnecessary brouhaha and speculation over revision of Participatory Notes (PN) restrictions and even possible relaxations to the restrictions. This was highly unlikely, as the restrictions meant to curb inflows and the resulting inflation may have flagged, but there is no sign of waning inflation. Also, it would look fairly silly to amend the regulations just weeks after it was introduced in the regulations even though announced and implemented in October of 2007.

There has been some relaxation of QIP pricing norms viz. calculation of the floor price. This is a positive though ad hoc move. Whether there needs to be a more systematic modification of the norms needs to be debated rather than a rationalisation only for the bear market. In fact most capital raising from the market requires a bull market to be in place because it requires the price to be at the least a historical price (higher of 6month/2weeks) and has been introduced to prevent placement of stock to select people at a special price to which other shareholders are not eligible as in a rights issue. This is true of FCCB, ADRs, QIPs and preferential allotments.