There is ample room for modifying the current system of book-building which is neither realistic nor reflects investor sentiment towards an IPO. This is an eyewash that does not serve the cause of the larger section of the market.
The IPO market infrastructure should be revamped, including the book building process leveraging the secondary market infrastructure. The listing day volatility can be substantially brought down if the price discovery process is made efficient and the delay between the closing date and the listing date is reduced.
The extreme volatility in a newly listed stock is mostly the creation of retail investors and speculators.
Since that is the case, the book building process should cover the responses from retail investors also to arrive at a price that truly reflects the market sentiment. The current practice of consulting only Qualified Institutional Buyers (QIBs) for the price discovery of an IPO is thus not realistic.
The IPO market infrastructure should be revamped, including the book building process leveraging the secondary market infrastructure. The listing day volatility can be substantially brought down if the price discovery process is made efficient and the delay between the closing date and the listing date is reduced.
The extreme volatility in a newly listed stock is mostly the creation of retail investors and speculators.
Since that is the case, the book building process should cover the responses from retail investors also to arrive at a price that truly reflects the market sentiment. The current practice of consulting only Qualified Institutional Buyers (QIBs) for the price discovery of an IPO is thus not realistic.
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