Indian market experts Nithin Kamath and Deepak Shenoy have flagged some concerns over global brokerage Fidelity's conditions on selling shares of SpaceX bought during the IPO.
While technically, shares allocated during the IPO can be sold 'whenever' a trader sees appropriate, selling within the first 15 calendar days from the start of trading in the secondary market will affect their ability to participate in future new issue equity public offerings through Fidelity, according to the brokerage's directives.
Further, Fidelity has defined how long participation will be impacted if a trader were to sell IPO allotments of SpaceX within first 15 days, also known as 'flipping'.
The first flip by an investor will lead to being blocked for six month, second flip will invite a one year ban, while third flip will get the trader banned permanently.
"The first day clients can sell without being labeled a flipper is the 16th calendar day after the IPO trades," the brokerage outlined.
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Zerodha CEO Nithin kamath compared the situation with Indian markets and hailed SEBI's regulatory framework for stock brokers.
"Sure, things can be better, but it's crazy how transparent and safe the Indian markets are compared to the US, all thanks to SEBI and the exchanges. It's not just Fidelity; even other big brokers seem to have 'flipping' restrictions in place," Kamath said in a post on LinkedIn.
Capitalmind CEO and portfolio manager Deepak Shenoy echoed the view and went a step ahead to ask ihow something like this was even legal.
"How is this legal? Imagine a broker telling you that you can't sell a stock you got in an ipo in the first 15 days... Sebi will gut them down in a second in India," Shenoy remarked in a post on X.
SpaceX shares landed on the Nasdaq index of the New York Stock Exchange on Friday with a 11% premium to its issue price. The stock made a big splash as it popped 30% after listing, indicating a keen investor interest. They ended 19% higher at $161.
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