The Securities and Exchange Board of India’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.”
<h3>📬 Subscribe to our newsletter</h3>
<p>Get notified whenever we publish a new blog post.</p>