Free trading should be allowed on all listed companies: Shriram Subramanian


ET Now: Do you think halting trading of the companies under the IBC banner is the step in the right direction?

Shriram Subramanium: Our view is that integrating capital market should not be changed just to accommodate the IBC process. The basic tenets of the capital market should continue to exist, i.e. free trading. There should be no restrictions on trading because at the end of the day IBC is a bankruptcy process. There should be a price discovery mechanism for the shares as there are various traders and investors who are participating in the capital market.

ET Now: Do you think there should be any sort of restrictions on this front, if not halting of trading?

Shriram Subramanium: I do not believe there should be any restrictions whatsoever. This otherwise would become a case of unnecessarily imposing or accommodating bidders, stressed companies, lenders and the IBC process. This insolvency process is a process by itself and has nothing to do with capital markets. There could be companies in IBC which are not listed on stock market. I firmly believe that free trading should be allowed. Moreover, investors can take their own informed decisions. And at the end of the day the role of SEBI is to ensure that.

ET Now: Some important cases against your point are – it is not a bad idea to rein in volatility of the stocks to ensure there is no price rigging. Also putting some restrictions may prevent routing of money that is being done for increase of stake by the promoters. Do you find merit in that?

Shriram Subramanium: So, my point is precisely the same. There should be reasonable disclosure standards and some such surveillance mechanism, which we hope already exist with Sebi. But the argument about putting restrictions on trading, putting restrictions on who is going to buy, etc are invalid. Who cares even if the existing promoter is buying, as long as disclosure is there, let them go and buy it. Probably that is an opportunity for retail investors to exit if the current existing promoters believe that there is value. 

Link: Economic Times- March 21, 2018