SME exchange likely by this fiscal

The Securities and Exchange Board of India (Sebi) is likely to finalise the guidelines for a separate SME exchange by the end of this fiscal.

Speaking on the sidelines of a seminar organised by the Confederation of Indian Industry (CII) in Kolkata on Saturday, M S Ray, executive director, Sebi said, "We have received feedback from the industry, and are in the process of analyzing the suggestions."

Ray hinted that the rules and regulations of the proposed exchange would be more stringent than the The Alternative Investment Market (AIM), a sub-market of the London Stock Exchange, meant for smaller companies.

This was in view of the expected high retail participation, rather than institutional participation, in the exchange.

"The AIM exchange is not very stringent in terms of rules and regulations. We would like to have more checks and balances."

The board is also considering the proposal to increase the limit of initial paid-up capital of the SMEs participating in the exchange beyond Rs 10 crore.

Suggesting some of the mechanisms for cost-cutting for SMEs, Ray said, they should be allowed half-yearly disclosure of results.

Also, there should be mechanism for the SMEs to file for IPO on an electronic platform.

Specialised merchant bankers may be licensed for exclusively catering to the needs of the SME segment, he said.

The merchant bankers or the underwriters in the IPO may be compulsorily required to be market makers for the company, he suggested.