The Securities and Exchange Board of India (Sebi) is exploring measures to regulate the grey or parallel market, where shares of unlisted companies such as NSE, Chennai Super Kings, Cochin International Airport, and Mohan Meakins are traded unofficially.
The proposed framework aims to facilitate price discovery for unlisted companies before their shares are officially listed on stock exchanges and to boost tax revenue for the government. India has emerged as one of the top IPO markets globally, with $2.8 billion raised in Q1 2025, despite global economic uncertainties.
Speaking at an industry event, Sebi chairman Tuhin Kanta Pandey highlighted that “pre-listing information is often insufficient for investors to make investment decisions” and suggested exploring a pilot initiative for a regulated venue where pre-IPO companies can trade with appropriate disclosures.
Sebi whole-time member Kamlesh Varshney further said that regulating the grey market could aid price discovery and ensure government tax collection, adding that a structured regulatory framework with proper checks and balances is under consideration.
Currently, India’s grey market operates with no official oversight from Sebi or stock exchanges, although trading in grey market stocks is legal. Grey market prices also help predict listing prices for companies going public.
Pandey added that Sebi would collaborate with the Ministry of Corporate Affairs and stock exchanges to establish a regulated platform for pre-IPO or unlisted companies, enabling trading with mandatory disclosures.
