SEBI proposes to make grading of IPOs mandatory

16 Dec 2006

1

Mumbai: The Securities and Exchange Board of India (SEBI) has proposed to make grading of initial public offers (IPOs) mandatory, its chairman M Damodaran said.

He was speaking at a workshop on capital market for journalists organised by SEBI.

He said the basic idea for making grading mandatory would to help investors in getting information about the quality of the IPO. Grading would be in the range from one to five, and would be done by the credit rating agencies, he said.

Damodaran said expenses for grading exercise would be either borne by SEBI or the stock exchanges and not by the company coming out with the IPO.

At present, grading of IPOs was not mandatory.

He said the primary market advisory committee, headed by Deepak Parekh, would soon give recommendations on these lines. SEBI would take a final decision after the panel submitted its report.

SEBI, meanwhile, was close to taking a call on the issue of allowing stocklending and short-selling by institutions.


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