SEBI Looking At Mechanism To Regulate Trading IPO Shares Before Listing, Says Buch

The Securities and Exchange Board of India is considering bringing in a 'when-listed' mechanism, which would allow the investors to trade their shares when a company is in the time period between completion of an IPO and listing, said Chairperson Madhabi Puri Buch on Tuesday.

Currently, as per the T+3 way of doing things, the investors get only three days from allotment of subscription to the listing day. However, as per Buch, even in this time a lot of curb trading takes place.

Curb trading is the dealing of shares outside the designated trading hours or the traditional setting of stock exchanges.

However, no other details regarding how this will be done or the relevant timelines are available as of now.

While speaking at an event, Buch further spoke about the importance of disclosures in IPO papers, whistleblowers, the use of AI, and why the regulator does not speak about the pricing of initial public offerings.

The regulator wants that investors should get adequate information when reading the IPO documents, Buch said during the event. The offer documents should allow the investors to assess if the price is fair, she said.

She explained that the role of SEBI as a regulator does not encompass within itself the control over IPO Pricing and is responsible of overseeing if required disclosures have been made so that the investors can take that call.

The legislation of parliament that establishes SEBI makes it clear that it is not to play any role in price discovery, she added.

Buch, who has always promoted the use of technology and AI in the compliance and regulatory processes of SEBI, mentioned that the regulator uses AI for faster and more accurate reviews of IPO documents and to identify any loopholes or missing details in them.

She further mentioned that SEBI is also working on standard IPO templates to prepare the documents in a more simplified manner.

While speaking at the event, the SEBI chairperson also spoke about the role of whistleblowers in today's landscape. She mentioned that they usually come forward when it is convenient for them or to get even.

However, Buch mentioned that it is a reason for the company to not engage in any wrongdoing, as any employee of an organisation can act as a whistleblower.