The Hindu Business Line : Retail investors

This refers to "IPOs: Government plans separate books for institutional, retail buyers" (Business Line, August 8). It is true that figures announced during IPOs often mislead retail investors. Not being adequately informed, the investors accept advice from brokers and jump into the fray based on the excitement of over-subscription reported by the media.

Retail investors end up bidding for offers at `cut-off' prices, for fear of missing out.

The retail contribution has a significant influence on the enforcement price discovery mechanism.

Other types of investors are forced to offer the price, as they are not permitted to quote `cut-off' prices. These anomalies would be addressed once separate books and methods are introduced for institutional and retail buyers to guarantee more avenues to the retailers. It is the duty of the government to offer more facilities to small investors. The various formalities in the trading activities in the primary and secondary markets should also be suitably modified. The present thinking to introduce changes in the book-building process of IPOs should pave way for more reforms in favour of retail investors.

C. P. Velayudhan Nair

Kochi

Letters to the editor and contributions can be sent by e-mail to: bleditor@thehindu.co.in

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