Proposals to curb mkt volatility soon: MoF panel

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Proposals to curb mkt volatility soon: MoF panel


By Abhijit Neogy,


The Standing Committee on Finance has raised questions about the norms for fixing the price of IPOs, reports CNBC-TV18, quoting sources. The Committee wants IPO pricing norms to be reviewed and has raised questions on market volatility. The Parliamentary Committee will meet on February 18 and the Finance Ministry will make a presentation.



Key Standing Committee members want an independent body under Sebi to review IPO price fixing norms. The panel also discussed possibilities of a speculators' cartel. The Finance Ministry and Sebi officials said market forces are ruling. According to them, market volatility is not due to any cartel or individuals.



The Standing Committee is likely to submit proposals to curb market volatility soon.



The Parliamentary Standing Committee on Finance meets on a regular basis. But today’s meeting was triggered by large-scale panic or alarm over continued volatility in the Indian stock markets. The Standing Committee members consist of politicians across the board.



There have been questions raised about the pricing of IPOs. If you look at the recent IPOs that have hit the markets, at least three of them have actually done poorly and investors’ money have gone down the drain. That is the question that has been raised.



There have been questions raised on IPO fixing norms as well. It has been said that the current IPO fixing norms or mechanism is pretty arbitrary, where the company takes a decision in consonance with the lead managers. That has to change. Apparently, Sebi has been reportedly asked to come up with a better mechanism for IPO fixation.



There have been questions on speculation as well. The current volatility is really the handiwork of speculator cartels working in the market. Sebi and Ministry of Finance officials have said that it is not really the case. They say that speculation, at least in the Indian markets, is at par with international benchmarks. There is no unwarranted speculation in the Indian markets.