Chennai: Market regulator Securities and Exchange Board of India (SEB) is mulling reducing the timeline for investors to apply for an initial public offer (IPO) through the Applications Supported by Blocked Accounts (ASBA) model, SEBI chairman CB Bhave said on Sunday, reports PTI.

ASBA is a new system that allows investors to apply for an IPO, keeping the application money in their bank accounts till the finalisation of the allotment.

"We are examining the feasibility of doing this…", SEBI chairman CB Bhave told reporters here.

Currently, it is a 21 day process and the financial transactions are structured in such a manner that investor has to pay on day one when applying for an IPO and the return comes to him after 30 days with the money getting blocked.

However, with the introduction of new system, retail investors, whose IPO application money is often blocked, would be able to complete procedures in one week, he said.

Investors would benefit because they do not need to pay anything upfront. So cash would not be required to be paid immediately. The time and costs involved in waiting to get the refunds and then crediting them to the account would be eliminated altogether under the new system.

Currently, in India only about 20% of retail investors were using this system despite banks implementing it. "India is a vast country and we want it to increase it further…"

Besides, Mr Bhave said they would take action against those companies which had violated the norms for obtaining 2G spectrum.

"SEBI looks into those areas where there is a violation on the capital market.... if there is any such violation we will look into it..", Mr Bhave said.

He said the market regulator would always keep its "eyes" and "ears" open on the capital market, and if there is any violation they would intervene in it.

About high-frequency trading practices in India, he wanted to know whether high-frequency trade by itself was a problem or the structure of exchanges were a problem.

"...We have looked at some exchanges in other countries....

They have given access to some members... something like they can see the order ahead of other members... I do not think that is a good idea," he said.

High-frequency trading is a programme trading platform that uses powerful computers to transact a large number of orders at very fast speeds. It uses complex algorithms to analyze multiple markets and execute orders based on market conditions for making huge profits.

It also helps brokerages execute transactions at rapid speed using co-location services.

Mr Bhave was here to take part in the valedictory of a three day seminar, CRESCITA-2010, organised by Bharatidasan Institute of Management, Tiruchirapalli.