SEBI Explores Regulated Pre-Listing Trading to Replace Grey Market
Why in the news
SEBI considered a supervised platform for pre-IPO share trades instead of informal grey market deals.
| Aspect | Grey market | Proposed venue |
|---|---|---|
| Pricing | Unofficial, distorts IPO valuation | Genuine demand-supply |
| Risk | Fraud and manipulation | Investor protection |
| Tax | Undocumented, so evasion | Revenue to exchequer |
Significance
- Fair valuation, tax compliance, safer investing and alignment with global practice.
Background
- The grey market is an unregulated space where shares of companies awaiting an IPO change hands privately between buyers and sellers.
- A formal SEBI-supervised platform would bring such trades under legal scrutiny, improving market integrity and efficiency.
Exam angle
- Regulator: SEBI.
- Stage: before listing.
- Problem market: grey market.