SEBI Chief Proposes New Pre-IPO Trading Platform: What it Could Mean for IPO Market

India’s IPO market is booming, but not without growing pains. Between the time when IPO shares are allotted and when they actually get listed, an informal “grey market” allows shares to be traded, often without rules, disclosures, or protection. At the FICCI Capital Market Conference 2025 (CAPAM) held in Mumbai, SEBI Chairman Tuhin Kanta Pandey suggested the idea of creating a new official platform where pre-IPO shares can be traded safely. This could rewrite the rules of IPO trading, balance innovation with investor protection, and bring transparency to a part of the market that for long has been under the shadows.

What exactly did SEBI say?

At the FICCI Capital Markets Conference (August 21, 2025), SEBI Chief Tuhin Kanta Pandey brought up the idea of a regulated pre-IPO trading platform. He noted it was just a proposal, saying, ‘this is only in principle with what I’m stating.’ SEBI, as a regulator, has not announced any official plan or begun discussions as an organization.

Pandey noted:

• Information available before listing is often not enough for investors.
• The grey market is unregulated, risky, and prone to fraud.
• The idea is to potentially offer a clean, transparent platform for such trades if pursued, enabling pre-IPO companies to allow trading subject to disclosure requirements.

This is at a conceptual stage; SEBI may engage with exchanges, depositories, and intermediaries if the idea moves forward.

Why is this move important?

India’s capital market is no longer niche, it is now one of the fourth-largest in the world.

• Over 13 crore investors are part of the market (around 9% of the country’s population).
• 7 crore mutual fund investors.
• As per FICCI, in FY25 alone, companies raised ₹4.3 lakh crore via IPOs, with another ₹1.4 lakh crore in the pipeline.
• Cash market volumes have doubled in three years.

This rapid surge has created huge excitement around IPOs, but also left space for shady activities such as grey market premium (GMP) being traded without supervision. SEBI Chief’s idea looks like a natural step to bring order, much like how online railway bookings replaced unauthorised ticket agents.

What will change if this happens?

At present:

• Grey market dictates “premium” (GMP) for IPOs.
• Retail investors often rely on word-of-mouth or dealers.
• No formal safeguards if deals go wrong.

If SEBI’s regulated platform is launched in the future:

• Trades between allotment and listing could happen under SEBI’s oversight on an official venue.
• Investors may receive proper disclosures before buying or selling.
• Brokers, depositories, and companies might be required to ensure transparent processes.
• Riskier informal cash transactions may be reduced.

This does not mean the grey market disappears overnight, but it will become less attractive, since investors will prefer official channels.

What does it mean for you as an investor?

• If implemented, it could provide a safe and transparent alternative, reducing reliance on informal sources like friends, brokers, or WhatsApp rates to trade allotted IPO shares before listing.
• Better price discovery: Prices will reflect actual demand instead of unverified guesswork.
• Reduced fraud risk: Fake apps, clones, and unregistered dealers will be sidelined since SEBI will require registration and disclosure.
• Not immediate: Investors should note this is an idea under consideration and not yet a live facility or guarantee.

What about derivatives and other reforms?

Apart from pre-IPO trades, SEBI is also considering:

• Longer-tenure derivative contracts: Today, most equity derivatives are near-term. SEBI’s internal study showed 91% of retail F&O traders lost money in FY25, with losses crossing ₹1 lakh crore. Longer-tenure products could promote hedging over speculation.
• Digital safety & AI governance: SEBI is cracking down on fake apps and misleading content, while also working on guardrails for AI use in markets.

Closing Thoughts

India’s equity markets are expanding rapidly, but with growth comes growing risks. A regulated pre-IPO trading platform, if launched, could bridge a critical gap, turning grey market chaos into a structured, secure option. As more ordinary Indians invest, SEBI’s message is clear: innovation must go hand-in-hand with investor protection.

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