The Securities and Exchange Board of India (SEBI) is planning to create a platform where shares can be traded even before they are officially listed on the stock exchange.
SEBI Chairperson Madhabi Puri Buch shared this information during a program, explaining that investors are interested in trading shares right after they are allotted, but before they are listed. She emphasized that investors should have a legal option to trade during this period.
Regulated Trading Instead of the Grey Market
Currently, after shares are allotted but before they are listed on the exchange, they are traded informally in the grey market. This is an unregulated market where trading happens outside of SEBI’s rules.
To address this, SEBI proposes creating a regulated platform that will allow such trading to happen legally.
Once shares are allotted and transferred to investors’ demat accounts, they can be traded until the official listing, eliminating the need for informal trading.
Why SEBI is Taking Action
This move comes in response to the rise in IPOs and the increase in grey market trading.
With more companies launching IPOs, including several early this year, SEBI aims to ensure that all trading is transparent and follows legal guidelines.
By implementing this new platform, SEBI hopes to reduce the risks of fraud and protect investors from unregulated trading.
Understanding the Grey Market
The grey market is an unofficial market where shares of IPO-bound companies are bought and sold outside of SEBI’s supervision.
This type of trading is risky, as SEBI cannot be held responsible for any issues, such as fraud, that occur in the grey market.
