Sebi's New Initiative for Pre-Listing Share Trading

In a groundbreaking move, the Securities and Exchange Board of India (Sebi) is developing a 'when listed' concept to facilitate trading in shares of companies that are in the process of being listed, post-IPO bidding closure and share allotment. This initiative aims to counteract the influence of the unofficial grey market, where the grey market premium (GMP) often dictates the listing price.

Madhabi Puri Buch, Sebi chairperson, emphasized the regulator's stance against the black market for pre-listed stocks, advocating for investors' rights to sell their allotted shares in a regulated environment. This move is expected to streamline the trading process, offering a structured platform for investors and companies alike.

Impact on the IPO and Bond Markets

This new concept mirrors the 'when issued' segment in the government bond market, allowing trading of bonds that have been notified but not yet issued. With over 91 large companies listing through IPOs in 2024, raising a record Rs 1.6 lakh crore, Sebi's initiative is timely. The regulator is also leveraging AI tools to expedite the processing of offer documents, preparing for an anticipated surge in IPO applications.

Sebi is crafting a standardized IPO submission template to simplify the process for companies and merchant bankers, incorporating a fill-in-the-blanks approach for standard parameters and space for non-standard disclosures. This development signifies a major leap towards enhancing market efficiency and investor protection.