SEBI has made Indian markets safer, more transparent than US: Experts on SpaceX shares
New Delhi, June 13
Zerodha founder Nithin Kamath and Capitalmind Mutual Fund CEO Deepak Shenoy have drawn attention to restrictions imposed by US brokerage Fidelity on investors seeking to sell shares acquired in the recent SpaceX IPO, contrasting the practice with India's regulatory framework.
Under Fidelity's policy, investors who sell their allotted SpaceX shares within 15 calendar days of the stock's trading debut -- a practice known as flipping -- risk losing access to future IPO allocations through the brokerage.
Reacting to the policy, Kamath on Saturday praised India's capital market ecosystem and the regulatory safeguards put in place by market regulator SEBI and stock exchanges.
"Sure, things can be better, but it's crazy how transparent and safe the Indian markets are compared to the US, all thanks to SEBI and the exchanges," Kamath said in a post on X.
He added that Fidelity is not the only brokerage to impose such conditions, noting that similar restrictions appear to exist among other large US brokers as well.
Capitalmind founder and portfolio manager Deepak Shenoy also questioned the practice, suggesting that such restrictions would be difficult to justify under India's regulatory regime.
"How is this legal? Imagine a broker telling you that you can't sell a stock you got in an IPO in the first 15 days. SEBI will shut them down in a second in India," Shenoy said in a post on X.
According to the brokerage's guidelines, a first violation can result in a six-month suspension from participating in new equity offerings, a second offence may lead to a one-year ban, while a third instance could trigger a permanent restriction.
"The first day clients can sell without being labeled a flipper is the 16th calendar day after the IPO trades," Fidelity said in its communication to investors.
Notably, SpaceX shares soared 19 per cent in their Nasdaq debut on Friday, propelling the company's value past $2 trillion, which makes it the sixth-largest company in the United States and transforming Elon Musk into the world's first trillionaire.
— IANS
Reader Comments
I don't think it's that black and white. SEBI has certainly improved things, but let's not forget the Adani-Hindenburg saga, the NSEL scam, or the Karvy incident. Regulatory gaps still exist. And US markets have their own advantages—like far greater liquidity and deeper derivatives markets. We should appreciate SEBI but also learn from global best practices rather than just patting ourselves on the back.
As someone who has traded in both markets, I can tell you the difference is night and day. In India, if a broker tries to pull something like this, you can complain to SEBI and they'll act within days. In the US, it's the Wild West—fine print that traps small investors. Kudos to Nithin Kamath for highlighting this. Our markets may not be perfect, but the regulatory framework is genuinely world-class.
Interesting perspective from across the pond. I'm a US investor and I agree these flipping restrictions are annoying, but they're designed to prevent IPO price manipulation by short-term speculators. However, the Indian approach of allowing free selling sounds more investor-friendly. Maybe the SEC should take notes from SEBI on certain things. Healthy competition in market regulation benefits everyone.
This is exactly why I shifted my trading to Indian markets. The SEBI's T+1 settlement, strict penalties for broker defaults, and the way they handle IPO allotments are honestly better than what you get in many developed markets. Yes, there are issues like transaction charges, but the safety net is genuinely robust. Good on Kamath and Shenoy for calling this out.
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