Vikrant Shekhawat : Jan 22, 2025, 06:00 AM
Share Market: The Securities Exchange Board of India (SEBI) keeps announcing new rules to protect transparency in the stock market and the interests of investors. Now SEBI is considering implementing a rule that will give investors an opportunity to sell the shares allotted in the IPO even before the listing of the company. SEBI chief Madhavi Puri Buch gave information about this proposed plan during an event on Tuesday.Why is the new rule necessary?According to Madhavi Puri Buch, when investors invest money in a company's IPO and get shares allotted to them, they often think of selling them after seeing the price of these shares in the gray market. But, trading in the gray market is unsafe and unregulated, which increases the risk of loss to investors. SEBI is planning to bring this process on a regulated platform, so that investors can do pre-listing trading in a safe and transparent manner.Pre-listing trading processCurrently, investors apply within a stipulated time frame after a company's IPO opens. After share allotment, the company is listed. This process is usually completed within 24 hours. During this time, large-scale trading of shares takes place in the gray market. If SEBI's new rule comes into force, investors will be able to buy or sell their shares on the regulated platform even before listing.Plan to rein in the gray marketSeeing the potential prices of shares in the gray market, many investors invest money in IPOs for better returns. However, it involves rigging and high risks. To control these irregular activities of the gray market, SEBI is considering allowing pre-listing trading.Investors will benefitThis move of SEBI will give many benefits to investors:Transparency: With the facility of pre-listing trading on a regulated platform, all transactions will be transparent.Security: The risk of trading in the gray market will be avoided.Liquidity: Investors will be able to use their capital without waiting for listing.Potential ChallengesAlthough this move can prove to be beneficial for investors, several challenges may arise during its implementation:Making investors aware of the new rules.Ensuring smooth and secure trading on the platform.Completely eliminating the effect of the gray market.ConclusionThis proposal of SEBI can prove to be a positive change for investors. If pre-listing trading is implemented, it will not only ensure the safety of investors but will also increase transparency and trust in the stock market. SEBI may take a final decision on this in the coming days, which will provide relief to investors and all stakeholders of the market.