In its attempt to clean up the primary market and make it more efficient, market regulator Sebi is all set to re-launch a product that existed way back in 1992. It plans to introduce albeit in a new avtaar the Stock Invest System. They are talking about introducing an online version of the Stock Invest System.
CB Bhave, Chairman, Sebi, said, "You could compare the two. You could call this the electronic stock invest instead of paper Stock Invest. But the major difference in case of paper stock invest is that you had to encash the entire instrument if you were making part allotment to the investor and had still to generate a refund order. In this case, no refund order is required. You simply have to remove the freeze from the investor's account."
Bhave added that banks will play a very crucial role because they will need to be able to provide this facility. "I am sure there will be competition among banks."
What is the Stock Invest scheme and why was it put in place?
It was like an account payee cheque where investors actually could buy them from an issuing bank that was participating in a primary market issue. The money remained in the investors account until the allotments were made and only then were the investors' accounts debited.
Now, this scheme was put in place to prevent promoters from delaying allotments or refunds. While that is not the case in the market in the current scenario, the regulator is hoping that this scheme perhaps will make the primary market more efficient and transparent. That is why you might see an online avtaar of the Stock Invest scheme hitting the market very soon.
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