SEBI Considering Platform for Trading in Companies before Listing
The Securities and Exchange Board of India (SEBI) is contemplating the introduction of a “when-listed” platform that would allow market participants to trade in companies that have completed their initial public offerings (IPO) but have not yet listed on the stock exchanges. This move aims to eliminate the need for the grey market price discovery channel.
SEBI chair Madhabi Puri Buch revealed this development at the annual convention of the Association of Investment Bankers of India (AIBI) in Mumbai on Tuesday. Currently, companies list on the bourses within three days of the IPO’s closure. However, during these three days, there is significant trading activity, often conducted through informal channels like the grey market.
The proposed platform would provide investors with a regulated way to trade in pre-listed shares, thereby replacing the need for informal channels. Additionally, SEBI is working on simplifying the IPO offer document to make it more accessible.
Buch stated, “We are standardizing the format for IPOs to streamline the preparation and examination process, benefiting both bankers and regulators.” She also emphasized that SEBI does not intend to interfere with IPO pricing, believing in the efficiency of the markets.
Furthermore, Buch highlighted the importance of companies adhering not only to the letter but also the spirit of the law, especially concerning governance standards. The increasing digital footprint makes it easier to detect non-compliance, reinforcing the need for ethical business practices.
Overall, SEBI’s initiatives aim to enhance transparency and efficiency in the IPO process, ensuring a level playing field for all market participants.
