Market Experts Praise SEBI Over Fidelity’s IPO Sale Restrictions

Indian market experts have highlighted the strength of India’s regulatory framework after US brokerage Fidelity imposed restrictions on investors participating in the recent SpaceX initial public offering (IPO).

Zerodha founder Nithin Kamath and Capitalmind Mutual Fund CEO Deepak Shenoy compared the policy with India’s capital market regulations and praised the transparency maintained by the Securities and Exchange Board of India (SEBI).

Under Fidelity’s policy, investors who sell their allotted SpaceX shares within 15 calendar days of the stock’s market debut may lose access to future IPO allocations.

The practice, commonly known as flipping, attracts penalties under the brokerage’s guidelines.

Kamath stated on X that India’s financial markets remain remarkably transparent and secure due to safeguards established by SEBI and stock exchanges. He also noted that Fidelity is not the only US brokerage to impose such restrictions and suggested that similar policies exist among other major brokers.

Deepak Shenoy questioned the legality of such measures from an Indian regulatory perspective.

In a post on X, Deepak Shenoy remarked that SEBI would not permit brokers to restrict investors from selling shares acquired through an IPO.

According to Fidelity’s policy, a first violation may result in a six-month suspension from future equity offerings. A second violation can trigger a one-year ban, while a third offence may lead to a permanent restriction.

Fidelity clarified that investors can sell without being classified as flippers only from the 16th calendar day after trading begins.

SpaceX shares surged 19 per cent during their Nasdaq debut on Friday.

The rally lifted the company’s valuation beyond $2 trillion, making it the sixth-largest company in the United States and reportedly turning Elon Musk into the world’s first trillionaire.