The Securities and Exchange Board of India (SEBI) is considering to launch a system which allows investors to sell shares as soon as the allotment is finalised in a maiden offer. Chairperson Madhabi Puri Buch on Tuesday said that this setup could help restrict grey market activity, reported PTI. Buch also announced that top two proxy advisory firms are all set to launch a portal which will act as a repository for related party transactions. She noted that this would be helpful in judging the governance standards in any firm for a stakeholder.
Addressing an Association of Investment Bankers of India (AIBI) event, the executive recalled that during her banking days, before she assumed the role of head of the capital markets regulator, grey market activity was referred to as curb trading. “We feel that if anyway investors want to do that, why not give them that opportunity in a proper regulated way? The idea is whatever is the grey market that is going on, pre-listing, we think that is not suitable. If you got an allotment and want to sell your right, sell it in the organised market,” she explained.
Buch added that discussions are going on with two stock exchanges to implement the when-listed facility which will allow shares to be traded during the three-day period between the allotment and listing.
“As soon as the allotment is over, the entitlement to that share gets crystallised. Then the person should have the right to sell that entitlement,” she noted.
Reacting to the development, Apurva Sheth, Head of Market Perspectives and Research , SAMCO Securities, said, “Market regulator has come up with a discussion paper on introducing the concept of ‘when-listed’ which will allow shares to be traded in SEBI between the close of IPO and its listing. This is a good move by the regulator as it will limit kerb trading or unofficial trading in the grey market.”
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