In recent years, the Securities and Exchange Board of India has speeded up the process of approving initial public offerings of companies and reducing the timeline to their actual listing. Now, the market regulator wants to curb the grey market activity between the allotment of shares of a company and the actual listing.
"Trading of 'when-listed' securities is something we are actively looking at with both the exchanges and hopefully we will bring that to you," Buch said.
She was speaking at the annual convention of investment bankers.
As per regulations, companies launching their public offers have to ensure that listing happens in three days of the issue closing.
During this three day period, lots of shares change hands, in the grey market. Buch believes that is not suitable.
"Today we are at T+3 from closure of the issue to listing. But, even during those three days, there is a lot of what in my days we used to call curb trading. We feel if anyway investors want to do that, why not give them that opportunity in a proper regulated way," she said.
Earlier, addressing merchant bankers, Buch said it was time the capital market industry moved from complying with the letter of the law to complying with the spirit of the law.
"It's not about being caught doing something wrong and fixing it, that's like getting a disease and going to a doctor to get a surgery to repair it, but rather to focus on fitness and well-being, both in terms of the spirit of the law and the letter of the law. That's the future that at SEBI, we would like to see going forward," Buch said.
Buch's statements come at a time the primary market is booming. As many as 91 companies raised close to Rs 1.6 lakh crore going public on the main board last year; that is three times more than the Rs 49,436 crore raised through 57 IPOs in 2023, according to data from Prime Database. The SME (small and medium enterprises) IPO market also saw lot of activity, with 240 companies raising Rs 8,761 crore, an 87 per cent increase last year.
But, several SME IPOs also raised eyebrows as they get subscriptions over 1,000 times and made massive listing gains. The regulator has recently tightened rules for the listing of SME companies over the past year also taken action against a few companies.
Under Buch's watch SEBI has begun to use AI (artificial intelligence) tools in a big way, in areas like for instance studying offer documents filed by companies. While, it's a tool to speed up approval processes, its also started using tools such as Agentic AI to find out if something is missing in company disclosures.
"The AI tool goes and scans the entire internet, social media, everything. And it identifies that is there any reference to the company or its subsidiary or its promoters or its directors and is there any news item about them. It then uses that information to classify that and say is there anything out of this which is negative and therefore a red flag and it reports it to the officer saying check whether this has been disclosed in the document or not," Buch explained.
Ultimately, Buch feels investment bankers must ensure they don't bring bad companies to the market.
"They know when they are bringing a pump and dump company into the market. I would say that you know if you are bringing a bad company to the market, you should not bring it," Buch said.
