SEBI Considers Enhancing Oversight in Pre-IPO Market

SEBI Considers Regulatory Framework for Grey-Market Premiums in Upcoming IPOs

2026 Outlook

Expectations for a strong IPO market in 2026 remain intact, with unregulated grey-market premiums (GMPs) continuing to distort price discovery for upcoming offerings. To address this issue, Securities Exchange Board of India (SEBI) chairperson Tuhin Kanta Pandey has indicated a willingness to explore a narrowly scoped regulatory framework for the "to-be-listed" market.

Regulatory Framework

Read also: Treasury Yields Experience Largest Increase in Two Weeks Following Release of Labor Market Data

At a recent event, Pandey clarified that any potential intervention would be limited to the "to-be-listed" space, where SEBI's statutory jurisdiction applies. This approach would involve a through-the-exchange mechanism for to-be-listed stocks, potentially after a company's draft red herring prospectus (DRHP) is approved.

Operational and Regulatory Challenges

Regulating pre-listing activity presents structural challenges, as many disclosure and compliance obligations under listing regulations come into force only after a company is listed. To address these challenges, SEBI would need to work out operational requirements and issue suitable consultation papers.

Exploratory Stage

Read also: US-Iran Tensions Spark Uptick in Oil Prices Amid Global Market Decline

Discussions regarding a regulatory framework are still at an exploratory stage, and no proposal or timeline has been finalised. Any eventual step would follow a formal consultation process with market participants, in accordance with standard regulatory protocols.