Sebi looks to allow trading in IPO shares ahead of listing to curb grey market activity: Buch
The Securities and Exchange Board of India (SEBI) is actively considering the introduction of a platform to facilitate the trading of shares allotted in an Initial Public Offering (IPO) before their official listing on stock exchanges. This initiative aims to regulate and legitimize the currently unregulated grey market activities that occur during the typical three-day interval between share allotment and formal listing.
SEBI Chairperson Madhabi Puri Buch highlighted the prevalence of curb trading in this interim period and emphasized the need for a structured mechanism to allow such transactions within a regulated framework. She stated, “Between the three days when the shares are allotted to the time the shares start trading, there is a lot of curb trading. If investors want to do this, why not give them the same opportunity in a properly regulated space.”
The proposed “when-listed” securities trading would enable investors to trade shares after the IPO closure but before their official listing. This move is expected to enhance transparency and protect investor interests by bringing pre-listing transactions under regulatory oversig.
This development comes in the context of a robust IPO market in India. In 2024, the country witnessed a significant surge in IPOs, with 91 large firms going public and raising a record 1.6 trillion rupees ($18.5 billion).
SEBI’s initiative to allow pre-listing trading is part of its broader efforts to curb unregulated market activities and ensure a fair and transparent trading environment for investors.
By – kartik