SEBI to allow sale of allotted shares before listing to curb grey market activity

The Securities and Exchange Board of India (SEBI) is planning to put in place a system wherein investors can sell allotted shares before listing them in the exchanges. The move is aimed at curbing post-IPO grey market activity, the market regulator said.

Stating that once grey market activity used to be known as ‘curb trading’, SEBI Chairperson Madhabi Puri Buch said, “We feel that if any investor wants to do that [sell shares] why not give them that opportunity in a proper regulated way.”

“The idea is whether 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 said.

Ms. Buch said discussions were on with stock exchanges to put in place a “when listed” facility where shares can be traded during the three days between allotment and listing.

She also said that for better corporate governance and benefit of stakeholders, two proxy advisory firms would soon start a portal that would be a depository of related party transactions.