New Delhi, June 13: Nithin Kamath, founder of Zerodha, and Deepak Shenoy, CEO of Capitalmind Mutual Fund, recently highlighted the restrictions imposed by the American brokerage firm Fidelity on investors who received shares in the SpaceX IPO. They compared this arrangement to India’s regulatory framework.
According to Fidelity’s policy, investors allocated shares in the SpaceX IPO risk losing their right to future IPO allocations through Fidelity if they sell those shares within 15 calendar days of listing, a practice known as “flipping.”
In response to this policy, Nithin Kamath praised the safety measures implemented by SEBI and stock exchanges in the Indian capital market. He stated on social media, “There is certainly room for improvement, but it is surprising to see how much more transparent and secure the Indian market is compared to the US, thanks to SEBI and the exchanges.”
Kamath also noted that Fidelity is not the only firm imposing such conditions; similar restrictions are observed among other major brokerage firms in the US.
Deepak Shenoy, founder and portfolio manager at Capitalmind, questioned the legitimacy of such arrangements, arguing that justifying these conditions within India’s regulatory framework would be challenging. He posted on social media, “How can this be legal? Imagine a broker telling you that you cannot sell shares received in an IPO for the first 15 days. SEBI would take immediate action in such a situation in India.”
According to the brokerage firm’s guidelines, a first-time violation can result in a six-month ban on participating in new equity offers. A second violation may lead to a one-year ban, while a third violation could result in a permanent restriction.
Fidelity informed investors that they could sell their shares starting from the 16th calendar day after the IPO listing without being classified as “flippers.”
Notably, during its listing on NASDAQ last Friday, SpaceX shares surged by 19%, pushing the company’s market value above $2 trillion, making it the sixth most valuable company in the US. This milestone also positioned Elon Musk as the world’s first trillionaire.
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