TagCapital Markets

Reforms in the IPO Process

Payment Mechanism Although there were reports about this in the recent past, SEBI yesterday formally notified reforms in relation to the payment process for resident retail investors in IPOs. Under this process, these retail investors do not have to make any payment when they bid for shares in the bookbuilding process, and then wait for refunds in case they do not obtain full allocation on the...

Recent Restrictions on Short Selling in the US: Comparing the Indian Position

The steep fall in prices of several US investment banks and financial institutions, such as Bear Stearns, Fannie Mae and Freddie Mac have been attributed to false rumours leading to panic selling, which has been further exacerbated by “naked” short selling. This has necessitated emergency action on the part of the Federal Reserve to rescue these institutions. Consequently, the SEC has imposed a...

Enabling SMEs Access the Capital Markets

Although the small and medium enterprises (SMEs) constitute a significant portion of India’s economy, they face several hurdles in accessing capital in a cost-effective manner. As far the capital markets are concerned, the SEBI (Disclosure and Investor Protection) Guidelines, 2000 provide several eligibility criteria for companies to qualify for being able to initiate public offerings. These...

Participatory Notes and Disclosure Requirements

In an earlier post, we had discussed the decision of the Securities Appellate Tribunal (SAT) setting aside a SEBI order that imposed a penalty of Rs. 1 crore on an FII for giving a false declaration regarding its issuance of participatory notes. Our guest contributor, Somasekhar Sundaresan, has written a column in The Business Standard analysing this decision. Of particular relevance are the...

A Possible IDR Debut in the Indian Markets

A few months ago, we had lamented about the lack of even a single issuance of IDRs by foreign companies in the Indian markets; this, despite the relaxation of rules in 2007 to facilitate IDR listings. We had said: “Indian Depository Receipts (IDRs) are instruments that enable foreign companies to access the Indian capital markets. It also provides avenues for Indian investors to make investments...

A Weak Start to Short Selling

Although short sales were allowed to commence last week (on April 21, 2008), the response thus far has been lukewarm. Various reasons have been offered for this result. The Hindu Business Line reports that market players attributed the poor response to bad timing, to relatively higher margin requirements for securities lending and borrowing (SLB) as compared to the future and options (F&O)...

Short Selling is Here

We had carried an earlier post commenting on the proposed introduction of short selling on the Indian stock exchanges and discussing the broad implications of that move. Short selling is now being implemented with effect from Monday, April 21, 2008, and the Bombay Stock Exchange as well as the National Stock Exchange have installed their securities lending and borrowing (SLB) mechanisms in...

Direct Market Access to Institutional Investors

SEBI yesterday issued a circular to the BSE and NSE with a view to granting direct market access to institutional clients through the brokers’ infrastructure. The rationale for the move is described in the circular as follows: “Direct Market Access (DMA) is a facility which allows brokers to offer clients direct access to the exchange trading system through the broker’s infrastructure without...

FCEB Taxation

In an earlier post on this blog, we analysed foreign currency convertible bonds (FCEBs). Although there was nothing on this count in the Finance Minister’s budget speech, the Finance Bill contains provisions clarifying the taxation position on FCEBs and the shares that arise out of conversion.
Today’s Hindu Business Line carries an article describing the Finance Bill provisions on FCEBs.

Budget Impact

This year’s budget, termed by the media as a populist one, has received mixed reactions from the corporate sector. At the same time, it has not gone well with the stock markets, which fell following the budget announcements. The entire set of budget materials is available here. Now, we look at some of the key implications of the budget on the corporate sector as well as financial markets:...

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