Prof. Jayanth R. Varma's Financial Markets Blog

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Prof. Jayanth R. Varma's Financial Markets Blog, A Blog on Financial Markets and Their Regulation

© Prof. Jayanth R. Varma
jrvarma@iima.ac.in

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Mon, 22 Jun 2009

Rethinking SEBI Pricing Guidelines

I participated in a panel discussion on SEBI pricing guidelines on CNBC last week. Transcripts are here and video is here. Some excerpts from my comments:

I think this two-week, six-months averaging and all that is a bureaucrat’s paradigm. It completely ignores market reality. ... when the environment has changed you need to be able to price based on what the current reality is. You cannot price on a two-week average when current market realities are totally different. ... I think the entire pricing guidelines are based upon bureaucratic delusions and they must go at least for liquid stocks.

I repeated my earlier arguments (see here and here) that regulators must trust market prices at least for liquid stocks.

Posted at 16:24 on Mon, 22 Jun 2009     View/Post Comments (1)     permanent link