AI to process IPO, platform to curb its grey marketing coming soon: SEBI

To curb the grey marketing of the Initial Public Offer (IPO) stocks once they are allotted, market regulator Securities and Exchange Board of India (SEBI) will bring a “when-listed” platform, said SEBI Chairperson Madhabi Puri Buch.

Grey market or parallel market here refers to the parallel stock market, where the stocks are bought before they are listed. However, in case of an IPO, the stocks can be bought even after the deadline is missed. The grey markets, though unofficial, are legal in India.

The SEBI chairperson reportedly said that the platform, soon to be launched, will allow the IPO-holders to sell the shares officially, before listing.

Notably, once the IPOs are allotted, they are listed after three days. The platform will allow investors, who have been allotted the IPOs, to trade them before listing. Till now, this process was part of the grey market.

AI to process IPOs

With the possibility of handling up to 1,000 IPOs in the next two years, SEBI is adopting artificial intelligence (AI) to make the process of reviewing IPO documents in a faster and more efficient way, Buch said on Tuesday. 

Speaking at the Association of Investment Bankers of India’s (AIBI) annual convention in Mumbai, Buch said SEBI is working on a standardised IPO template to simplify the filing process for companies and their merchant bankers.

The new template would follow a ‘fill-in-the-blanks’ format. Any information that doesn’t fit the standard format will be flagged separately for closer review, she told the gathering.

This system aims to divide IPO documents into two parts: standard information and exceptional details.

By focusing attention on sections that deviate from the template, SEBI hopes to make it easier for its officers to identify and address irregularities. The initiative is expected to save time for both companies and regulators.

“With the possibility of handling up to 1,000 IPOs in the next two years, this step will significantly reduce the workload for everyone involved,” Buch noted.

The AI tools will help in three key ways – document review, online search and content check.

SEBI’s exception reporting mechanism will further improve efficiency. By separating standard and non-standard sections, officers can prioritise their scrutiny where it is most needed, streamlining the review process.

“This approach will not only save time but also enhance the overall efficiency of IPO document preparation and review,” Buch added.

(with inputs from syndicated feed)

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