Grey market activity: Stock market regulator SEBI is considering launching a platform where investors can be allowed to trade in the shares of companies before the listing of the shares. Through this, the regulator wants to stop the grey market activity that takes place when the Initial Public Offer i.e. IPO comes.
SEBI Chairperson Madhabi Puri Buch gave this information while speaking at an event of the Association of Investment Bankers of India in Mumbai. Buch said – There is a large scale informal trading between the allotment of shares and the start of its trading. If investors want to do this, then why not give them such an opportunity on the regulated platform itself.
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Facility of trading of shares will be available before listing
Madhabi Puri Buch says that even though the trading of shares has not started on the stock exchange before listing, but if the shares have been allotted, then the investor is entitled to those shares. If the platform for trading starts before listing, then investors will be able to get the facility of trading of shares.
According to media reports, the profit from the listing of IPO has increased the grey-market activity significantly. Madhabi Puri Buch said that when she was an investment banker, grey market activity was called ‘curb trading’.
What is grey market activity?
Grey market is an unofficial platform for dealing in IPO. It is quite popular despite being illegal. However, only a select few trade in it. In this, trading is done over the phone with mutual trust. For this, it is necessary to have personal contact of the operator. There is no guarantee of completion of the deal in the grey market.
What is IPO?
When a company issues its shares to the general public for the first time, it is called Initial Public Offering i.e. IPO. The company needs money to expand its business. In such a situation, instead of taking a loan from the market, the company raises money by selling some shares to the public or by issuing new shares. For this, the company brings IPO.
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