SEBI moots regulated venue for pre-listing for better price discovery

The Securities and Exchange Board of India (SEBI) has mooted the idea of a “regulated venue” wherein pre-listing companies can trade subject to certain disclosures, Chairperson Tuhin Kanta Pandey said at an event organised by FICCI here on Thursday (August 21).

Wholetime member Kamlesh Varshney, who also attended the event, said that a project to regulate the grey market was “in process.”

“Before IPO, if it [grey market] is regulated, that can help in price discovery. If it is regulated, then the government also gets its due share of revenue, taxes, whatever it is. So, it is in the interest of everybody. If it can be regulated and a proper regime is made out with checks and balances. So that we are working on. If we can see, we can do it. We have a primary market advisory committee. We will discuss with them,” Mr. Varshney said.

Grey market is an informal market place where shares of companies that are up for listing trade based on an understanding between the buyer and seller.

Speaking on the sidelines of the event, Mr. Pandey said that the market watchdog was also mulling extension of the tenure of equity derivatives. Presently, the equity derivatives expire on weekly and monthly basis.

“Increasing the tenure means that whether we can have longer term derivatives but that will have to be done based on consultations,” Mr. Pandey said.

His comments come two weeks after he denied reports that weekly expiries will be done away with, calling them “speculative”.

Mr. Varshney also explained SEBI’s measures at taking down influencers who were misleading investors or even dealing in unfair trading practices. “We did carry out one search operation yesterday. It’s a big name in that industry. And I must give credit to my team because we have been working on this case. Last week, we decided that we will do the search operation on Wednesday,” Mr. Varshney said, without naming the influencer or disclosing the evidences obtained.

“If in the name of education, if you are misguiding youth, you are giving guaranteed return performance, you are giving call in the classroom that invest here, buy this stock, sell this stock. You are using live data to trade in equity market, that you cannot do without having SEBI registration and without following our rules and regulations,” he said.

“Enforcement is not for revenue collection. The idea is to create a fear in the market that there is a law enforcement agency,” he stated.