Bhopal (Madhya Pradesh): Dealing in shares of unlisted companies is a huge risk and retail investors should better avoid it, said Krishnan Iyer, senior vice-president, National Stock Exchange.
“Nowadays,
a large number of ordinary people are dabbling in the stock market. Many such retail investors, hoping for higher returns, often get into trading in shares of unlisted companies i.e. companies that are not listed on public stock exchanges like NSE and BSE. Most start-ups fall in this category,” he said
Iyer was in the city to participate in a seminar on Capital Markets, organised by the Bhopal Chapter of The Institute of Chartered Accountants of India (ICAI) in the city on Sunday.
According to Iyer, the unlisted companies’ market is totally opaque with zero transparency. “The prices are determined by perception, rather than on performance parameters. There is no regulation, neither there can be,” he said, adding that the market is run by intermediaries, who are only concerned about their commission.
He said that the NSE has a surveillance team to curb market manipulation. “We monitor trading in real time and report unusual or suspect transactions to the market regulator SEBI, which alone can take action in such cases,” he said.
About shady outfits using social media to promise high returns to investors, he said that the NSE uses algorithms to identify them. “Once we identify such enterprises, we get their advertisements pulled down. But it is a cat-and-mouse game. We use certain buzzwords or key phrases to identify them. But then they start using new words,” he said.
Referring to the upheavals in the global crude market due to turmoil in the Middle East and Latin America as well as the Russia-Ukraine conflict, Iyer said oil being an essential commodity, any abrupt ups and downs in supplies or prices affect all sectors of the economy. “No matter what you make, you need to transport raw materials and finished products. And that needs oil,” he added.
