Revamped IPO norms soon to prevent rigging: SEBI

The Securities and Exchange Board of India (SEBI) is taking a fresh look at initial public offer (IPO) norms, in order to put in more checks and balances in high-frequency trading and prevent manipulation, SEBI chairman U K Sinha said on Tuesday.

"Some members are indulging in manipulation ... we will take action after completion of due process whenever we find instances of violation (IPO norms). It also calls for a relook at our entire IPO process,'' Sinha said at an event organised by the Association of National Exchange Members of India.

The market regulator will review the entire process of initial share sale and will put in place a centralised know-your-customer (KYC) system for financial sector intermediaries. ''We have decided to have a thorough review of our risk management system as the current system is more than 10 years old,'' he said.

Earlier this year, SEBI had decided to introduce a new short and simple form for IPO investors for increasing retail participation in the stock markets.

In the first half of the current fiscal, 30 companies have raised funds totalling over Rs5,000 crore through IPOs.
"Some people in the market are opting for lax compliance and more risky ways to expand their business in times of downturn ...we have a problem because people are taking more leverage than they legally can. This raises chances of default so we have to take measures," he said.

On high frequency or algorithmic trading he said it requires strict checks as it involves potential risks. He cited instances of short-collection of client margins and large-scale violations of client code.