Markets regulator Sebi chief Tuhin Kanta Pandey on Thursday said the watchdog is exploring a regulated platform for pre-IPO (initial public offering) trading, which could eventually replace unregulated grey market deals. The move, if implemented, may allow investors to trade shares in a transparent environment during the three-day gap between allotment and listing.Speaking at the FICCI Capital Market Conference 2025, Pandey said pre-listing information is often inadequate for investors to make informed decisions. “An initiative, on a pilot basis, is being considered for a regulated venue where pre-IPO companies can choose to trade, subject to certain disclosures,” he explained. Such a system, he added, could curb the growing activity in the unlisted space, which remains largely unregulated but attracts many investors despite significant risks, PTI reported.Currently, there is a gap of at least three trading sessions between subscription closure and listing, during which the grey market operates. The regulator’s intervention aims to address this gap and bring order to a segment that has gained traction alongside India’s buoyant IPO market. According to data, 48 mainboard firms have gone public so far in 2025, with August alone witnessing 11 IPO launches.When asked whether talks were being held with depositories on creating such a platform, Pandey clarified that “this is only in-principle with what I’m stating”. He acknowledged potential challenges around unnecessary processes, disclosure requirements, fundraising frictions and onboarding issues. PTI reported that his remarks underline Sebi’s intent to balance innovation with investor protection.Plans for longer-tenure equity derivatives On derivatives, Pandey said Sebi is considering ways to extend the tenure and maturity of equity derivative contracts in a calibrated manner. The move follows Sebi’s own study, which showed that 91 per cent of individual futures and options (F&O) traders lost money in FY25, collectively incurring losses of over Rs 1 lakh crore.“We will consult with stakeholders on ways to improve in a calibrated manner the maturity of derivative products so that they better serve hedging and long-term investing,” Pandey said. While cash market daily volumes have doubled in the last three years, he noted that derivatives must be strengthened to improve quality and balance.He highlighted that derivatives play a crucial role in capital formation but warned against an unhealthy tilt toward ultra-short-term contracts. Last month, Sebi whole-time member Ananth Narayan had flagged concerns about the dominance of ultra-short-term derivatives and hinted at regulatory steps to extend maturity.Transparency, AI and investor protection in focus Pandey also stressed the need for greater transparency in disclosures, investor onboarding and digital platforms. “Innovation in the capital market must lower friction and compliance costs for issuers, investors, and intermediaries while managing the risk,” he said, adding that co-creation with industry and investors is crucial to frame optimum regulations.He pointed to past innovations such as alternative investment funds (AIFs), real estate investment trusts (REITs), infrastructure investment trusts (InvITs) and specialised investment funds (SIFs), which were developed through a balance of regulation and market demand.On artificial intelligence, he said AI could reshape financial markets by improving customer engagement, risk assessment, fraud detection and financial inclusion. At the same time, he cautioned that AI adoption could magnify concerns around data protection and cybersecurity. “We have to think of AI as an assist, not a substitute for judgment. Sebi’s proposed guiding principles for AI ML emphasise a tiered approach, data and cyber controls and clear accountability,” he said, noting that the RBI’s recent AI committee report complements Sebi’s framework.Clamping down on fraud and misinformation Pandey emphasised Sebi’s commitment to protecting investors from online fraud. The regulator, he said, is collaborating with social platforms to pull down misleading financial content before it spreads. He warned against “fake apps, cloned websites and unregistered entities” that mislead investors and said Sebi would intensify awareness campaigns around such risks.He further noted that the Securities Market Approach for Resolution Through ODR (Online Dispute Resolution) portal has resolved 7,000 disputes worth Rs 500 crore so far, underscoring Sebi’s focus on speedy investor redressal.On the industry’s role, Pandey said the regulator expects “clean edges” with no unregulated advice, clear and timely disclosures, and mandatory Sebi registration details visible on every app, website and social media handle.