India's IPO Refund

India's IPO market has been one of the wildest in the world. In 2011, a number of IPOs jumped as much as 100 percent on the first day, only to fall shortly afterwards, giving rise to concerns about market manipulation. In an effort to alleviate these concerns, India has implemented a change in the way trades are settled in IPOs. Traditionally, say you buy 100 shares of stock for $4,000, sell the shares for $4,100, and then buy another 100 shares for $4,020, the sell would cancel $4,100 since you received the money and you would only need to deposit $3,920 at the end of the day. Under the new rules, buys and sells are settled separately so you would have to deposit $8,020 in the first 10 days of an IPO. This makes investors tie up more capital, allowing for less trading. A second proposed rule would require the company to reimburse investors up to 50,000 rupees (about $920) if the stock falls more than 20 percent in the first 3 months of listing in a rising or flat market, or falls 20 percent more than a market decline in a falling market.