Source: IE
Context: SEBI plans to introduce a “when-listed” platform to regulate pre-listing share trading, aiming to curb grey market activities and protect investor interests.
About the ‘When-Listed’ Platform:
- What it is: A regulated platform for trading unlisted shares between IPO allotment and official listing.
- Developed by: Securities and Exchange Board of India (SEBI) in collaboration with stock exchanges.
- Aim: To reduce grey market trading, ensure transparency, and provide a regulated avenue for pre-listing share transactions.
- Features:
- Allows trading of IPO-allotted shares before official listing.
- Operates within the T+3 timeline (allotment to listing).
- Replaces informal grey market trading with a formal, regulated mechanism.
- Significance:
- Enhances market transparency and investor protection.
- Curbs volatility and speculative activities in the grey market.
- Formalizes pre-listing trading, reducing risks for retail investors.
- What is the Grey Market?
- The grey market refers to the unofficial trading of securities, particularly shares, before they are officially listed on stock exchanges.
- It operates outside the regulatory framework, relying on demand and supply dynamics.
- Transactions are based on notional prices, and no physical delivery of shares occurs.
- Existing Mechanism:
- Currently, SEBI mandates that shares must be listed on stock exchanges within three working days (T+3) after the IPO bidding process closes.
- Allotment of shares is completed on T+1, and trading begins on T+3.
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