SEBI makes IPO grading mandatory

New Delhi: The market regulator's compulsory SEBI has come up with Initial Public Offers (IPO) grading norms.

The SEBI board, which met in Mumbai on Thursday has decided to allow short-selling by financial institutions and also approved a proposal to make grading of initial public offers mandatory.

"Post the budget speech, discussions have already taken place with both the exchanges. The exchanges have indicated a state of readiness to push this through. I don't imagine two months time will be taken to get this started," says M Damodaran, Chairman, SEBI told CNBC-TV18.

However, this has triggered mixed reactions from companies lining up IPOs as these companies are yet to figure out how and on what basis the grading will be done.

Says MD Prime Database, Prithvi Haldia, "SEBI board has approved mandatory grading of IPOs. Fees are to be paid by companies instead of by the investor protection fund."

He said that a simple IPO grading product will be introduced and that grading will be evolved to cover all public issues of companies.