SEBI Chief Proposes Regulated Platform for Pre-IPO Share Trading

SEBI Chief Proposes Regulated Platform for Pre-IPO Share Trading

Mumbai: Securities and Exchange Board of India (SEBI) Chairperson Tuhin Kanta Pandey on Thursday floated the idea of creating a regulated platform for pre-IPO share trading, urging industry stakeholders to explore the feasibility of such a framework.

Speaking at a capital markets conference organized by industry body FICCI, Pandey said:

“Can we think of an initiative on a pilot basis for a regulated venue where pre-IPO companies can choose to trade subject to certain disclosures?”

Growing Relevance of Pre-IPO Market

India’s IPO market has been booming, with companies raising a record ₹4.3 trillion in FY25 and another ₹1.4 trillion expected to be mobilized in the coming months. Yet, Pandey noted that pre-listing disclosures are often insufficient for investors to make fully informed decisions.

The unlisted shares market, while increasingly popular, remains largely unregulated and fraught with risks, particularly for retail investors. Currently, investors require a demat account, and shares are typically sourced from employees, early-stage investors seeking exits, or in some cases, promoters.

Balancing Opportunities and Risks

Pandey stressed that any regulatory initiative must balance innovation with investor protection. “The framework must provide a diverse range of opportunities depending upon risk appetite—while managing the associated risks,” he said.

Industry experts have highlighted the challenges retail investors face in accessing unlisted shares, including opaque pricing, limited disclosures, and procedural complexities. Mint recently reported that this market segment, despite its risks, has witnessed a surge in demand.

A Call to Intermediaries

Pandey’s remarks also placed responsibility on intermediaries—investment bankers, depositories, and brokerages—to come up with workable solutions. “Here are some key challenges: unnecessary processes and pain points that cause avoidable friction in fundraising, disclosures, and investor onboarding. How can they be removed?” he asked.

Still at Discussion Stage

While not a formal proposal, the idea reflects a shift in regulatory thinking toward fostering innovation in India’s capital markets. It signals SEBI’s intent to encourage structured growth while safeguarding investor interests.

If implemented, a regulated pre-IPO trading platform could reshape India’s fundraising ecosystem, offering companies additional flexibility and providing investors with safer access to emerging opportunities.