On Tuesday, 21 January 2025, SEBI’s Chairperson, Madhabi Puri Buch commented that they are working on the launch of a SEBI new platform called “when-listed” for shares that have been launched via IPOs but yet to get listed on the stock exchanges. This is to reduce the share trading activity in the grey market which happens prior to the listing of the shares. This platform will be available for both the primary stock exchanges – NSE and BSE. Let’s find out this new IPO grey market regulation.
Why SEBI is launching a “when-listed” platform?
As per current IPO trading regulation, the time required for listing the stocks on the stock exchanges is T+3 which means that the day on which the IPO is closed, three days post that are required to list the shares of the company. In these three days, there is a lot of grey market activity taking place in an unregulated manner. With this SEBI when-listed platform, SEBI is planning to establish a regulated way of doing grey market activity. The traders who are interested in trading the stocks before they get listed can do the trading using this new platform, once launched.
The platform is in an advanced stage of development where the standard templates for IPO are now being analysed. Once this platform is launched, this will not only help the traders, but also the merchant bankers, issuers, and others, with ease. Even there will be provision for including exceptions as well.
Current Grey Market Scenario
As of now, after the IPO is closed, it takes one (trading) day for the allotment of the stocks. Now as traders/investors have all the rights to sell the stocks they have been allotted post the allotment, they often do it in the grey market in an unorganised and unregulated manner. This increases the risk of losing money as the grey market is unregulated and especially the new retail investors often suffer from these activities. The entire grey market works on a demand and supply phenomenon that is unorganised. Investors even look for premiums in the grey market for stocks that are yet to be listed and even before they are launched as IPOs.
Wrapping up
Market participants are rejoicing about the SEBI IPO platform launch decision as this would help them sell the shares they get allotted in the IPO even before listing and that too in a legal way. However, time will reveal how this new platform can shape the IPO market in India and the grey market activities.
Source: TheIndianExpress
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