Context:
The Securities and Exchange Board of India (SEBI) is exploring the creation of a regulated venue for pre-listing trading of company shares to bring transparency to the grey market and aid in fair price discovery. The proposal was discussed at a FICCI event attended by SEBI Chairperson Tuhin Kanta Pandey and Whole-Time Member Kamlesh Varshney.
Key Highlights:
- Regulated Venue for Pre-Listing Trading:
- Expected to enhance price discovery and ensure tax compliance, benefitting both investors and the government.
- Pre-listing trading refers to the buying and selling of a company’s shares before their official listing on a stock exchange, often through informal “grey markets” or a proposed regulated exchange platform.
- Regulation of Grey Market:
- A grey market is an unofficial marketplace for goods or securities traded through unregulated channels, bypassing authorized distributors or official stock exchanges.
- SEBI’s initiative seeks to formalise and monitor these trades through proper disclosure norms.
- Equity Derivatives Tenure:
- SEBI is considering extending the tenure of equity derivatives beyond current weekly and monthly expiries.
- Chairperson clarified that weekly expiries will not be discontinued despite market speculation.
- Action Against Market Misconduct:
- SEBI continues to take action against misleading influencers and unfair trading practices in capital markets.
