Why in news?
The Securities and Exchange Board of India (SEBI) has proposed a new category called a “regulated venue” where companies can raise funds and investors can trade shares before a formal stock market listing. This initiative seeks to bring transparency to private share trading and improve investor protection.
Need for a regulated venue
- Growing private markets: In recent years, start‑ups and unlisted companies have raised large amounts of capital through private placements. These deals often happen off‑exchange with little regulatory oversight.
- Information asymmetry: Only a few investors have access to financial details of unlisted companies, leading to unequal opportunities and risks of fraud.
- Price discovery: A regulated platform can provide more accurate valuations before companies launch initial public offerings (IPOs). This benefits both issuers and investors.
Main features
- Only accredited investors, such as high‑net‑worth individuals, venture funds and institutional investors, can participate. Retail investors continue to invest through public issues.
- Companies must disclose key financial information and risks on the platform, enabling informed investment decisions.
- SEBI will regulate trading rules, disclosure standards, settlement mechanisms and investor protection measures.
Potential impact
By creating a regulated venue, SEBI aims to make India’s capital markets deeper and safer. It bridges the gap between private fund‑raising and public listings, allowing companies to test valuations and build investor confidence. The move could also discourage informal grey‑market trades that often mislead retail investors.