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News Topical, Digital Desk : Securities and Exchange Board of India (SEBI) Chairman Tuhin Kanta has said that the capital market regulator is considering whether it should regulate the country's unlisted share market, which currently operates largely outside its direct control. Speaking at the Association of Investment Bankers of India's annual convention for 2025-26, Tuhin Kanta Pandey said that the issue is being discussed with the Ministry of Corporate Affairs.
"SEBI will first have to examine whether it has the legal authority to regulate companies that are not listed on the stock exchange and how far such regulation can be extended," he explained.
What are unlisted shares?
Unlisted shares are the market for shares of companies that are not traded on a stock exchange. Investors typically purchase these shares through private deals, employee stock option plans, or intermediaries. Because these companies are not listed, they are not required to adhere to strict and consistent reporting rules, which often results in limited or delayed information for investors about a company's financial health and business risks.
Why is monitoring the unlisted share market necessary?
SEBI chief Tuhin Kanta Pandey said one of SEBI's main concerns is the wide gap between prices in the unlisted market and the valuations that emerge when companies launch initial public offerings (IPOs). "Prices negotiated in private deals often do not match those negotiated during the IPO book-building process, leading to confusion and potential risks for investors," he said.
He also clarified that the rules followed by listed companies cannot be directly applied to unlisted firms. Traditionally, SEBI's regulatory role begins only when a company prepares to list its shares.
Will GMP end?
Gray Market Premium (GMP) is an informal market where unlisted shares and upcoming IPO shares are traded. This market is not regulated by stock exchanges or SEBI. Therefore, there is a lack of share price discovery. If SEBI begins to formally regulate the trading of unlisted shares, price discovery will become easier, thus eliminating GMP from its current informal status.
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