SEBI Plans Regulated Trading Platform to Address Grey Market Concerns

The Securities and Exchange Board of India (SEBI) is considering a new regulated trading mechanism for shares during the interim period between an initial public offering (IPO) closure and official listing. This initiative, called ‘when-listed’ securities trading, aims to replace unregulated grey market trading with a structured platform.

Curbing Grey Market Activity

Currently, a three-day gap exists between IPO closure and share listing, during which unregulated trading, often referred to as curb trading, occurs. These transactions operate outside formal channels, with premiums in the grey market serving as perceived indicators of listing gains. SEBI Chairperson Madhabi Puri Buch, speaking at the Association of Investment Bankers of India (AIBI) Annual Convention 2024-25, announced the initiative to create a regulated platform. This system aims to provide investors with a safer, controlled environment for trading during this interim phase.

India’s IPO market has witnessed tremendous growth, with 91 companies raising ₹1.6 trillion in 2024, according to Prime Database. SEBI data indicates continued momentum in 2025, with public issues worth ₹1.8 trillion already approved or awaiting clearance.

Enhancing Transparency and Corporate Governance

Madhabi Puri Buch also highlighted SEBI’s focus on improving transparency in IPO disclosures to ensure investors have access to adequate information for assessing IPO pricing. While SEBI does not influence pricing, its role lies in evaluating whether offer documents provide sufficient clarity for informed decisions.

Additionally, Buch addressed the need for refined disclosure guidelines for unprofitable companies, with two working groups reviewing key performance indicators (KPIs) to balance comprehensive data with usability. SEBI’s broader goals include enhancing corporate governance, such as better transparency in resolutions at annual general meetings (AGMs) and clear communication of audit committee approvals. These initiatives aim to empower stakeholders with relevant information for sound decision-making.

Conclusion

SEBI’s proposed initiatives highlight its commitment to creating a more transparent and regulated financial environment. The introduction of the ‘when-listed’ trading mechanism and enhanced governance standards significantly improve investor protection and market efficiency.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.