SEBI Introduces e-IPO’s: A Boon to Retail Investors


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Just when the whole world is getting digitalized to the core , SEBI (Securities and Exchange Board of India) is laying tracks to introduce e-IPO’s for the first time. In an initiative to make raising capital a task a click easy for all the retail investors, SEBI plans to make raising an IPO (Initial Public Offer), FPO (Follow on public Offer) and RI (Rights issue) as easy as making bill payments.

By reinforcing technology in such a way that prospective investors can bid for any number of shares online and without really having to actually make spot payments, the e-IPO’s are surely going to make you re-think about investing in shares. Not only will be easy on consumers, it’s easy on the environment too as the number of hard copies will drastically reduce in e-IPOs.

Also SEBI is promising speedy investing time frame by making the whole process of investing just 6 days long, which will half of prevailing 12 days.

And they have not forgotten the smartphone users as well – SEBI is developing e-IPO mobile app, so that trading can be done on the go with your smartphones! With stock experts and market specialists debating over the new reforms, it’s only a matter of time we taste this.

Background to Investing

If you are new to IPO investments, here is a quick background.

For all of those who think stock markets are all about chaos and numbers, you might just want to know that it’s not a gamble that most can win but if you win, you can resign your job and bet away huge profits till you own a Merc.

Investing in shares just means buying a right to be part of a company and earn as the company grows. As much as the emotional belief, you also need to be witty moneywise to put your trust in a company.

All you need to do is open a demat account and sign up with a brokerage firm that’ll help you sell or buy lots (shares in different stacks). Since humongous amount of public money is involved, the regulations are higher to prevent Harshad Mehta type of scams. Although it may interest you to know that SEBI was a result of the horrific side effect of the scam that has been the biggest Dalal Street will ever know (At least we hope).

How we are supposed to invest before the proposal becomes a reality

Most retail investors or small time investors will have to buy shares through listed private placements or Qualified Institutional Placements. After choosing the company to invest in, you need to block the number of shares at the price and spot buy the same by applying with a cheque. Your stock broker will block the shares with the company. And with few days of watching business channels you will know when your stock is trading at green or red, decide your position on those shares to earn profits.

Why SEBI wants YOU to invest?

Thanks to all those successful small and Medium Businesses, people want to invest considering the part of raising capital isn’t all that easy with people looking for different investment vehicles. The whole market structure needs the household sector’s investments to increase liquidity in the economy by eliminating any kinds of financial crunch like recession, hyper inflation and helps keep a check on interest rates. Known that small amounts of money from a small person won’t make a resounding difference, but with lakhs of such small investors, we could be heading for a bullish run, which means more return than your bank will ever offer you.

It’s a thumbs up from our side to the new e-IPO proposal. Do let us know what you think!

[Read SEBI Circular]

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