{"id":44737,"date":"2025-01-29T08:10:59","date_gmt":"2025-01-29T02:40:59","guid":{"rendered":"https:\/\/vajiramandravi.com\/current-affairs\/?p=44737"},"modified":"2025-05-06T14:03:56","modified_gmt":"2025-05-06T08:33:56","slug":"sebi-when-listed-mechanism-regulated-trading-of-ipo-shares-before-listing","status":"publish","type":"post","link":"https:\/\/vajiramandravi.com\/current-affairs\/sebi-when-listed-mechanism-regulated-trading-of-ipo-shares-before-listing\/","title":{"rendered":"SEBI When-Listed Mechanism: Regulated Trading of IPO Shares Before Listing"},"content":{"rendered":"<h2>What\u2019s in Today\u2019s article?<\/h2>\n<ul>\n<li>SEBI When-Listed Mechanism Latest News<\/li>\n<li>When-Listed Platform<\/li>\n<li>Benefits of the \u201cWhen-Listed\u201d Facility for Investors<\/li>\n<li>Current timeline for listing of shares<\/li>\n<li>Grey Market Trading in IPOs<\/li>\n<li>SEBI When-Listed Mechanism FAQs<\/li>\n<\/ul>\n<h2>SEBI When-Listed Mechanism Latest News<\/h2>\n<ul>\n<li>SEBI plans to launch a \u201cwhen-listed\u201d platform for trading of shares of companies that have finished their initial public offering (IPO) and are yet to be listed on stock exchanges.<\/li>\n<\/ul>\n<h2>When-Listed Platform<\/h2>\n<ul>\n<li>This platform will facilitate trading of shares between IPO allotment and official listing, addressing concerns around unregulated markets.<\/li>\n<\/ul>\n<h3>Reducing Grey Market Activity<\/h3>\n<ul>\n<li>The grey market involves unofficial, unregulated trading of IPO shares based on demand and supply before listing. It operates in cash with no actual delivery of shares.\u00a0<\/li>\n<li>Many retail investors use grey market premiums to evaluate IPO investments.<\/li>\n<\/ul>\n<h3>Addressing Grey and Kerb Trading<\/h3>\n<ul>\n<li>SEBI aims to eliminate <strong>grey and kerb trading<\/strong> during the T+3 period (time from IPO closure to listing) by introducing a regulated alternative.\u00a0\n<ul>\n<li>Grey market trading and kerb trading both refer to buying and selling shares outside official stock exchanges.\u00a0<\/li>\n<li>This usually happens before a company\u2019s shares are officially listed after an IPO.\u00a0<\/li>\n<li>Investors trade these shares at a grey market premium based on demand.\u00a0<\/li>\n<li>The term &#8220;kerb trading&#8221; comes from the idea of trading on the street, highlighting its unofficial nature.<\/li>\n<\/ul>\n<\/li>\n<li>It emphasized that this platform would formalize trading already happening unofficially, providing a transparent, regulated system.<\/li>\n<\/ul>\n<h3>Collaboration with Stock Exchanges<\/h3>\n<ul>\n<li>SEBI is working with stock exchanges to implement this platform, aiming to provide investors a safe and formal way to trade shares during the pre-listing period.<\/li>\n<\/ul>\n<h2>Benefits of the \u201cWhen-Listed\u201d Facility for Investors<\/h2>\n<ul>\n<li><strong>Regulated Trading:<\/strong>\n<ul>\n<li>Investors who have received IPO allotment can sell their entitlement in a regulated market, instead of the unregulated grey market.<\/li>\n<li>Sebi aims to eliminate the informal grey market trading and allow formal trading through an official platform.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Reducing Market Volatility:<\/strong>\n<ul>\n<li>The grey market is seen as a source of volatility and distorted market sentiments.<\/li>\n<li>The new platform will help control market instability by ensuring all trading is monitored by the regulator.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Protecting Retail Investors:<\/strong>\n<ul>\n<li>Market participants suggest that Sebi should address grey market activity starting from the IPO announcement to safeguard retail investors\u2019 interests.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<h2>Current timeline for listing of shares<\/h2>\n<ul>\n<li>Currently, after an IPO bidding closes, shares must be listed on stock exchanges within three working days (T+3). Shares are allotted on T+1 day.\u00a0<\/li>\n<li>In the gap between allotment and listing, investors engage in grey market trading.\u00a0<\/li>\n<li>Sebi aims to reduce this pre-listing grey market activity.<\/li>\n<\/ul>\n<h2>Grey Market Trading in IPOs<\/h2>\n<h3>How it Works:<\/h3>\n<ul>\n<li>Investors, due to low chances of IPO allotment, often enter the grey market.<\/li>\n<li>Trading begins once an IPO announcement is made, with brokers focusing solely on the grey market.<\/li>\n<li>A premium is added above the IPO price band (e.g., Rs 90-100 per share with a premium of Rs 10-30).<\/li>\n<li>Investors place bids with grey market operators to buy or sell shares.<\/li>\n<\/ul>\n<h3>Settlement:<\/h3>\n<ul>\n<li>The opening price on the official listing day determines the settlement.<\/li>\n<li>If the stock opens higher than the grey market price, operators pay the difference.<\/li>\n<li>If the stock opens lower, investors incur a loss.<\/li>\n<\/ul>\n<h2>SEBI When-Listed Mechanism FAQs<\/h2>\n<p><strong>Q1.\u00a0<\/strong>What is the meaning of kerb trading?<\/p>\n<p><strong>Ans.\u00a0<\/strong>Kerb trading refers to informal, off-market trading of shares outside official stock exchanges, typically after market hours.<\/p>\n<p><strong>Q2.\u00a0<\/strong>What is grey market trading?<\/p>\n<p><strong>Ans.\u00a0<\/strong>Grey market trading involves unofficial trading of IPO shares before they are listed on the stock exchange, often at a premium.<\/p>\n<p><strong>Q3.\u00a0<\/strong>What are the SEBI guidelines for listed companies?<\/p>\n<p><strong>Ans.\u00a0<\/strong>SEBI enforces rules for transparency, investor protection, and fair practices, ensuring listed companies follow legal and financial standards.<\/p>\n<p><strong>Q4.\u00a0<\/strong>What is a listed company in SEBI?<\/p>\n<p><strong>Ans.\u00a0<\/strong>A listed company is one whose shares are traded on stock exchanges, regulated by SEBI to ensure investor protection.<\/p>\n<p><strong>Q5.\u00a0<\/strong>What is the role of SEBI in the IPO process?<\/p>\n<p><strong>Ans.\u00a0<\/strong>SEBI regulates and approves IPOs, ensuring transparency, fairness, and compliance with laws to protect investor interests.<\/p>\n<p><strong>Source :<\/strong><a href=\"https:\/\/indianexpress.com\/article\/explained\/explained-economics\/sebi-platform-grey-market-investors-9794675\/\" target=\"_blank\" rel=\"nofollow noopener\">IE<\/a> | <a href=\"https:\/\/www.ndtvprofit.com\/markets\/sebi-when-listed-mechanism-pre-ipo-trading-explained\" target=\"_blank\" rel=\"nofollow noopener\">NP<\/a> | <a href=\"https:\/\/indianexpress.com\/article\/business\/to-curb-grey-market-activity-sebi-is-working-on-launching-when-listed-platform-9792056\/\" target=\"_blank\" rel=\"nofollow noopener\">IE<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>SEBI introduces a \u201cwhen-listed\u201d platform to facilitate regulated trading of IPO shares, reducing grey market activity and protecting investors.<\/p>\n","protected":false},"author":5,"featured_media":44738,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[18],"tags":[],"class_list":{"0":"post-44737","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-upsc-mains-current-affairs","8":"no-featured-image-padding"},"acf":[],"_links":{"self":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/44737","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/comments?post=44737"}],"version-history":[{"count":0,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/44737\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media\/44738"}],"wp:attachment":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media?parent=44737"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/categories?post=44737"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/tags?post=44737"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}