The s (SEBI) move to pilot a regulated pre-IPO trading platform is set to test how much of the country’s thriving grey market can be drawn under the regulatory system. The platform, which would allow trading in the short window between allotment and listing, is expected to affect price discovery, disclosure norms for unlisted companies, and the way investors approach IPOs.
The grey market, which operates informally and without regulatory oversight, has long influenced investor sentiment. Grey market premiums (GMPs) often become shorthand for expected listing gains, but the record has been unreliable.
A July 2025 review of 19 IPOs showed that more than 60 per cent listed below their GMPs, around 40 per cent below ‘Sauda’ rates, and 26 per cent at par or below issue price. Popular names such as Paytm, Zomato, Nykaa, Policybazaar, and more recently, Brigade carried strong premium into listing, only for post-listing performance to lag the hype.
GMP mismatch
By shifting trades onto a regulated platform, SEBI aims to reduce this mismatch. The proposed three-day trading window would be conducted under regulatory oversight, with disclosures, registered intermediaries, and formal settlement norms.
“Price discovery belongs inside the market, not outside it,” said Feroze Azeez, Joint CEO, Anand Rathi Wealth. “India needs a regulated pre-IPO marketplace as the current grey market is informal, opaque and vulnerable to settlement risk.”
GMP is a poor guide to value and a poor basis for capital allocation as it reflects sentiment, not fundamentals, Azeez said. “With speculative distortions reduced, listing-day volatility should moderate. The gap between grey market expectations and actual listing prices will narrow.”
Formal platform
The grey market is perceived as attractive on account of the rapid, relationship based transactions, which could possibly see a decline if conducted on a regulated platform, said Ragini Singh, Partner, ThinkLaw Advocates. “Through a regulated formal platform, SEBI seeks to mitigate risk and enhance transparency by rendering the process of price discovery more reliable,” said Singh.
“The regulator will need to balance elements of unlisted shares with its recent concerns of unlisted companies having a large number of shareholders,” said Yash Ashar, Senior Partner, Cyril Amarchand Mangaldas. Further, the disclosure regime of such unlisted companies will also have to be carefully thought through and along with a path to their eventual listing on the main boards of the stock exchanges, Ashar said.
Amit Tungare, Managing Partner at Asahi legal said, “This model could diminish grey-market opacity, strengthen price discovery, mitigate fraud, and channel previously untaxed trades into a compliant, transparent system, especially benefiting ESOP holders.”
Price formation is also expected to become more transparent, accessible and reduce execution risk for companies — evolving into a mature market. While the development itself is only at a pilot stage, its potential impact on price discovery, risk management, and IPO performance is expected to be far-reaching.