Madhabi Puri Buch says platform in the works to allow trading of shares before listing

SEBI Chairperson Madhabi Puri Buch

Capital market regulator Sebi is actively considering a platform to allow share allotees in a public issue to trade in the security even before the formal listing, chairperson Madhabi Puri Buch in an event on January 21.

"Between the three days when the shares are allotted to the time the shares start trading, there is a lot of curb trading," Buch said. If investors want to do this, why not give them the same opportunity in a properly regulated space, she added.

"The shares may not have started trading on the markets, but the person might have been allotted those shares, so he has the entitlement for those shares," Buch told reporters on the sidelines of the event.

The mechanism will allow investors to trade in the period between shares getting credited in the demat account and the actual listing on the stock exchanges.

Presently, securities are frozen in the demat account till the time of listing, so as to prevent trading of unlisted shares on unorganised platforms.

This assumes significance, as trading of unlisted shares is quite rampant in the so-called grey market, which is completely unregulated. Further, the grey market premium is often looked upon as an indicator of potential listing gains.

Sebi's move comes at a time when the primary market has been seeing record buoyancy in terms of the number of IPOs as well as the cumulative fund raising.

The National Stock Exchange (NSE) leads Asia in terms of the number of initial public offerings (IPOs) in 2024, and has also set a record for equity raised in the primary market. The year 2025 too looks promising, with close to Rs 1.80 lakh crore worth of public issues already in possession of Sebi approval, or are awaiting nod, data from Prime Database has showed.

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