Prof. Jayanth R. Varma’s Financial Markets Blog

A blog on financial markets and their regulation

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.

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