Big Update for Share Market Investors: SEBI’s New Initiatives
In a significant development for share market investors, the Securities and Exchange Board of India (SEBI) has proposed the creation of a regulated platform for pre-IPO share trading. This initiative aims to replace the largely unregulated grey market, providing a more secure and transparent environment for investors. As the Indian IPO market continues to gain momentum, these changes could reshape the landscape for both new and seasoned investors.
The Need for a Regulated Platform
Currently, there exists a three-day gap between the closure of an Initial Public Offering (IPO) and its listing on the stock exchange. During this period, trading often shifts to the grey market, where transactions occur without regulatory oversight. This unregulated space poses significant risks for investors, who may not have access to reliable information or protections against fraud.
SEBI Chairperson Tuhin Kanta Pandey emphasized the necessity for a formal platform that allows investors to buy and sell shares during this interim period. By creating a regulated environment, SEBI aims to mitigate the risks associated with grey market dealings, ensuring that investors can make informed decisions based on transparent information.
Enhancing Investor Protection
The proposed framework for pre-IPO trading is designed to enhance investor protection. By requiring companies to disclose certain information before shares can be traded, SEBI aims to level the playing field for all investors. This initiative is particularly timely, as the Indian IPO market has seen a surge in activity, with 48 main-board companies listed so far in 2025.
Pandey noted that the current pre-listing information often falls short of what investors need to make sound investment decisions. The new platform would address this gap, providing a structured environment where investors can engage in pre-IPO trading with greater confidence.
Plans to Extend Tenure of Equity Derivatives
In addition to the pre-IPO trading platform, SEBI is also exploring ways to extend the tenure and maturity of equity derivatives products. This move aims to discourage excessive speculative trading, which has led to significant losses for individual traders—91% of whom suffered losses in FY25.
By lengthening the tenure of these products, SEBI hopes to create a more stable trading environment. This initiative aligns with the regulator’s broader goal of deepening the cash equity markets while enhancing the quality of derivatives available to investors.
Addressing Challenges in Fundraising
During his address at the FICCI Capital Market Conference 2025, Pandey acknowledged the various challenges that SEBI faces in implementing these initiatives. He highlighted the need to streamline processes, reduce friction in fundraising, and improve disclosures and investor onboarding.
As the market evolves, SEBI is committed to exploring emerging areas, products, and asset classes that can create both demand and supply of capital. This proactive approach is essential for fostering a robust and resilient capital market in India.
Conclusion
The proposed initiatives by SEBI represent a significant step forward in enhancing the regulatory framework for share market investors in India. By introducing a regulated platform for pre-IPO trading and extending the tenure of equity derivatives, SEBI aims to create a more transparent and secure trading environment. As the Indian IPO market continues to flourish, these changes could provide investors with the confidence and protection they need to navigate this dynamic landscape.
Investors should stay informed about these developments, as they could have a profound impact on their investment strategies and the overall market environment.