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Markets • IPO Reforms • SEBI Regulations • Grey Market • Investor Safety

Sebi Launches ‘When-Listed’ Platform to Regulate IPO Grey Market Trades

In a significant move to curb unregulated grey market activity, the Securities and Exchange Board of India (Sebi) is set to introduce a “when-listed” trading platform. This new mechanism will allow investors to buy and sell IPO-allotted shares before official listing, ushering in a more transparent, secure, and regulated trading environment.

🧾 What Is the “When-Listed” Platform?

• This platform enables post-allotment, pre-listing trading of IPO shares in a regulated setting.
• Currently, investors wait three days post-allotment for shares to list on exchanges.
• During this waiting period, informal grey market trades often occur—outside of Sebi’s regulatory purview.
• The new platform will replace this opaque window with official infrastructure, offering liquidity and security to investors.

⚠️ Understanding the Grey Market

• The grey market is an informal marketplace for IPO shares that begins after the IPO subscription closes but before official listing.
• It is driven by:
  • Speculation on listing prices
  • Broker-led deals based on perceived demand
  • Price premiums called the grey market premium (GMP)
• Example: If the IPO band is ₹90–₹100 and GMP is ₹30, shares may unofficially trade at ₹130.
• However, if the stock lists at ₹95, early grey market buyers suffer immediate losses.

📅 Current IPO Timeline & Trading Gaps

• T (IPO closing day) →
• T+1 (Allotment day) →
• T+3 (Listing day)
• The 2-day gap between allotment and listing has fostered rampant grey market speculation.
• Sebi’s platform will bridge this gap, allowing regulated, visible, and traceable trading immediately after allotment.

✅ Benefits for Investors

• Liquidity: Investors can exit their positions early, if needed.
• Transparency: Eliminates hidden dealings and price manipulation.
• Fair Price Discovery: Trades reflect market demand rather than speculative noise.
• Retail Investor Protection: Minimises risk from unofficial, broker-led dealings.

💬 Industry Voices

“The grey market exposes retail investors to unnecessary risk. Formalising this phase can reduce speculative volatility,”
– Jyoti Prakash Gadia, Merchant Banker

“Once shares are allotted, why shouldn’t investors be allowed to trade them in a formal environment?”
– Madhabi Puri Buch, Sebi Chairperson

🔍 Looking Ahead: Regulating Early-Stage Speculation

While the “when-listed” platform addresses trading between allotment and listing, concerns remain about even earlier speculation, which begins as soon as IPO announcements are made. Experts urge Sebi to develop mechanisms to regulate:

• Early grey market deals
• Informal premium-setting
• Broker-driven speculative trades

A holistic strategy will ensure that the entire IPO process remains fair, transparent, and investor-friendly.

This marks a major reform in India’s capital markets—ushering retail investors into a safer, formalised post-IPO landscape, and diminishing the influence of grey market opacity once and for all.